In his second "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer sat down with Jay Shah, CEO of Hersha Hospitality Trust (HT) , the hospitality REIT with 48 properties and an 8% yield.
Shah said that Hersha, which operates mainly in the New York, Washington, D.C., Philadelphia, Boston and Miami markets, will be seeing some tailwinds in 2020. He said their two properties in Miami that were closed from hurricane Irma have now reopened and Miami is forecast to be the top growth market in 2020. Additionally, Hersha has sold its slower-growing properties and is adding new, higher-growth properties in their place.
When asked about the competition from Airbnb, Shah explained that Airbnb did dilute many markets with excess inventory. However, as municipalities are cracking down on illegal rooms with additional regulations, some markets are seeing Airbnb rentals fall by up to 50%. Meanwhile, in the New York market, demand overall is flattening, Shah said, making Hersha's properties more attractive.
Shares of Hersha are down 21% for the year. Let's see if the charts offer any hope of a bottom.
In this daily bar chart of HT, below, we can see that prices have been under pressure the past year and are now starting to show a little stability around the $13.50 area. Prices are still trading below the bottoming 50-day moving average line and well below the declining 200-day moving average line.
The level of volume looks like it has increased since early August suggesting we may be seeing a change of ownership as weak longs sell or dump shares of HT to investors with deeper pockets.
The daily On-Balance-Volume (OBV) line did not make a new low in October when prices made a new low so we have small bullish divergence.
The Moving Average Convergence Divergence (MACD) oscillator made a higher low in October than late August for another small bullish divergence.
In this weekly bar chart of HT, below, we can see some beginning signs of stability. Prices look like they have attracted some buying interest in the $14-$13 area the past three months. HT is still below the declining 40-week moving average line so we know the major trend is still down.
The weekly OBV line shows a long decline but more recently we can see what could be a double bottom in the OBV line.
The MACD oscillator has generated a cover shorts buy signal. An outright buy signal will be a way off.
In this Point and Figure chart of HT, below, we can see a potential upside price target of around $16. It's a start.
Bottom line strategy: HT is not showing us a great bottom just yet but the downside looks limited and the yield is attractive. If you can afford to risk a close below $13 you can probe the long side of HT.