timwest

Avalon Bay (AVB) lagging Vail Mountain Resorts (MTN)

BATS:AVB   AVALONBAY COMMUNITIES INC
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PAIRS TRADE:

I have mentioned this pair of stocks before and the disparity continues to grow. I was short MTN for awhile and took my loss and I was long AVB and booked a few small gains. Net-net I broke even, but I have watched this divide continue to widen this year. Sometimes I think year-end makes people make decisions or change their minds, but I suppose with a strong winter-season upon us that investors are focusing on Vail to make a bundle (along with their many other fine ski resort properties). Meanwhile,Avalon Bay languishes in the far more boring world of providing basic shelter for people on the move and those in transition in life. In the past, AVB was a good foreshadower of trouble ahead for MTN , but so far the red-light warning continues to shine.

Strategically, risk 5% to make 5%-10%. Short MTN , Buy AVB.

Cheers.

Monday, Dec 16, 2013 10:17 AM EST
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