The Next Enron
For the past few weeks, I have been researching the commercial REIT sector. That will be the next bubble to burst. There is one REIT I am following in particular: its common stock is WORTHLESS but it trades for $$. They have done well over the past decade by optimizing their capital structure for the environment we lived in. Unfortunately for them, that environment changed.
The management and board of this company continues to “report” strong earnings. A major accounting firm has audited them and signed-off on their 10-K.
I don’t sit on the board of any public companies. I am not an accountant or CPA. I did not go to Harvard Business School. I know very little about Sarbanes-Oxley, but I know it was created to prevent another Enron.
I think to myself that with all the auditors, economists, analysts and board members that are involved with this company and don’t see a problem - I must be wrong.
In spite of these facts, I am going to buck the trend and go on records as calling this company’s eventual failure. I believe the issue is not IF they will fail, the issue is WHEN? Like Lehman, Fannie Mae/Freddie Mac and Enron predict this company will suffer the fate of GAMBLER’S RUIN.