Disclosure: I established a long position in NXRT on 4/4/2016.
First of all, I want to thank following posts drew my attention to this name. It caught my eye first that Michael Burry held it as his biggest position.
Michael Burry’s SEC 13F filing
Clark Street Value post about NXRT
Value Investors Club post about NXRT
After I made my trade, I wanted to write something about it, however I noticed there are this Gurufocus article on 4/4/2016 and this Seeking Alpha article published on 4/5/2016 already did most of the job and shared some of my views. Thus, I will be brief on the upside as you will be able to get them from articles listed above, and will try to dig more into the downside.
Short pitch: NXRT is one of the few REITs using “value add” strategy on class B properties. The management is very determined to execute on this strategy and thinks the market didn’t get them (small cap, spun off a year ago, only 2 analysts from some boutique sell sides covering them). In my view, this firm is actually a flipper partnership under a REITs cover (to avoid corporate level tax), and their flipping strategy seems to be very lucrative (if it works out).
Following I will touch some of the red flags that people dislike the most (and I disliked initially):