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Monday, July 16, 2007

Paperstand

The WSJ reports that Ford (F) is considering selling its Volvo car unit, as the auto maker continues to look for ways to bolster its slumping US operations. The shift, reversing an earlier position that the Sweden-based luxury division wasn't for sale, marks the potential abandonment of Ford's 8y effort to tap the lucrative luxury-car mkt with European brands. It sold its Aston Martin luxury nameplate for $848m and has begun considering a sale of its Jaguar and Land Rover brands as well. Those brands, along with Volvo, made up Ford's Premier Automotive Group, which has had losses of $4.8bn since ‘04.

“Heard on the Street” says that judging by the sharp selloff of REITs in recent weeks, it is clear that some investors feel the good times have come to an end for these stocks. Yet, some analysts and investors believe that the heavy selling was too extreme and that some REITs, particularly those in the office and retail sectors, could stage a comeback. Indeed, just as the residential housing slump has produced some steals for home buyers, the REIT selloff may similarly yield some good deals for stock-mkt investors. For a bargain hunter, a smart shopping list could include Simon Property (SPG), Kimco Realty (KIM), Public Storage (PSA) and SL Green Realty (SLG), which have mgmt teams with proven track records of boosting shareholder value and which will likely continue to benefit from strong economic fundamentals. According to Stifel Nicolaus analyst David Fick, more than $3bn has flowed out of US real-estate mutual funds since May 1, representing one of the strongest outflows from dedicated mutual funds in the sector's history. "Many of the investors [dumping] REITs are nontraditional real-estate investors who jumped into the mkt in recent years chasing higher returns but aren't long-term holders," Mr. Fick says.

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