The sudden resignation of a company’s CEO generally signals more changes are ahead. Early last week Plymouth-based Silver Bay Realty Trust announced the resignation of its CEO, David Miller. Miller was a managing director of Pine River Capital Management and Two Harbors Investment Corp. in 2011 and focused on new business development when the private equity group decided to form a real estate investment trust that would invest in single-family homes. Silver Bay, a real estate investment trust, went public in Sept. 2012.
Since then the firm has acquired a portfolio of more than 8,600 properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, South Carolina, Ohio and Texas. Its business model is to acquire, renovate, lease and manage single-family properties. Silver Bay hasn’t had a profitable quarter yet.
The key for Silver Bay and other institutional investors entering the space is to acquire a large enough portfolio of properties to drive economies of scale. Some experts suggest a good starting point is a portfolio of 1,000 to 2,000 homes but many more may be necessary to become profitable. Thus acquisitions represent a growth strategy and a key exit strategy.
In announcing Miller’s resignation, Silver Bay also announced that its lead independent director, Thomas Brock, would become interim president and CEO while it looks for a permanent replacement.
Analyst Jade Rahmani follows Silver Bay for Keefe, Bruyette & Woods. In a company update he published last week, Rahmani wrote, “In our view, Mr. Miller’s resignation and SBY’s search for a replacement with a strong real estate background may signal that a sale of the company is not imminent and that SBY plans to focus on improving operations for the foreseeable future.”
Proto Labs stock given favorable outlook
Market dips can create buying opportunities for investors. With Proto Labs stock down more than 17 percent in the last six months, Canaccord Genuity analyst Bobby Burleson has identified the Maple Plain-based company as one opportunity in the broader market sell-off.
“We feel that Proto Labs is better positioned for growth in spite of ongoing macro-related challenges than its peers,” Burleson wrote. “Proto Labs software driven service is a true differentiator for customers in reducing the time and cost of prototype parts production.”
Burleson has a “buy” rating on Proto Labs and a 12-month price target of $75 per share. Proto Labs was trading last week around $55.90.