Sold Essex Property Trust – 74.07% Annual Return

Essex Property Trust

On June 18, 2021 at 2:56 PM, Essex’s share price dropped to $304 per share triggering a stop-loss order (explained in Phase Three of the Value Investment Membership Program) purchased a month earlier. This automatic sale of all 92.2638 shares netted $302 per share. The Value Investment Fund pays $1 per share for any transaction and also pays $1 per share for any option or market mechanism such as the stop-loss directive. Total adjusted sales revenue equals $27,863.67 ($302/Share X 92.2638 Shares). Basis in Essex Property Trust is $20,000 including the original purchase price plus the purchase transaction fee of $1 per share.

The Fund profited $7,863.67. The total holding period was 201 days. Thus, the actual return on the investment was 39.32%. The effective annual return equates to 71.4%.

Furthermore, during this time period, the Fund earned an additional $294.58 from dividends. Total cumulative earnings equal $8,158.25 on a $20,000 investment. Final effective annual return clears 74.07%.

On a per share basis, this is the report:

  • Sold the Stock on 06/18/21 for $304/Share via Stop-Loss                      $304.00
  • Transaction Fees: A) Sale of Stock $1, B) Stop-Loss Fee $1                      (2.00)
  • Net Proceeds from the Sale                                                                                        302.00
  • Average Purchase Price for Two Tranches (10/24/20 & 01/11/21) for   $215.77
  • Held the Stock for 201 Days (Weighted Average)
  • Transaction Fee of $1/Share                                                                          1.00
  • Basis in the Stock                                                                                                     $216.77
  • Gain on the Sale                                                                                                         $85.23
  • Actual Return on Investment ($85.23/$216.77)                                                        39.93%
  • Effective Annual Return                                                                                            71.40%
  • Dividends Earned                                                                                                       $3.19

A stop-loss directive was implemented in May when the share price exceeded the targeted sale price set back in January 2021. The stock’s market price hit $316 per share and a stop-loss directive was issued to ensure a minimum $302 net proceeds from the sale. With $2 of fees, the stop-loss price was set to $304. The share price dropped to this value on June 18, 2021 triggering the stop-loss. Today, July 20, 2021, the market price per share is now over $330. The purpose of the stop-loss was to lock in the preset desired return on this investment calculated back in January of 2021.

There are several articles related to this particular stock and are as follows:

  1. First Tranche Purchase in October 2020 – 48.9644 Shares
  2. Second Tranche Purchase in January 2021 – 43.2994 Shares
  3. Intrinsic Value of Essex Property Trust January 2021
  4. Value Investing With Real Estate Investment Trusts – Analysis and Evaluation Techniques

In general, this stock was evaluated to have an intrinsic value of approximately $256 with a maximum value of around $283 for 2021. Shares were purchased at an average price of $217, basically a 15% discount against the low end of intrinsic value. For the next year, anytime the stock price drops below $255 per share, it is a ‘Buy’.

Overall, this was a solid and easy investment decision. It performed as predicted almost to the exact timing talked about in the articles written about Essex Property Trust. Act on Knowledge.

© 2021 – 2022, David J Hoare MSA. All rights reserved.

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