TRADE ALERT - Core Portfolio May 2025 (Selling A Position)

Austin's recent decision to sell Modiv Industrial (MDV) got me thinking, and I have decided to follow his lead and sell my position as well.

Just like him, I like Modiv a lot, but fear that the trade war could derail our investment thesis.

Here is what Austin wrote:

I still really like CEO Aaron Halfacre. You won't find a more passionate or dedicated CEO in the REIT space. I may own MDV again someday.

But I began to worry about what effect the "Liberation Day" tariffs would have on MDV's various manufacturers, many of whom rely on imported inputs as part of their production process. Given MDV's high payout ratio and small portfolio, it would only take a few tenant defaults or rent restructurings to put the dividend at risk.

I'll keep an eye out for MDV's Q1 2025 earnings report and reassess from there.

Many of its tenants are smaller and weaker private companies, and they will really feel the pain if these tariffs remain in place for longer.

Their portfolio is heavily exposed to California, representing 30% of their portfolio, and to the automobile sector, which today represents 15% of the portfolio.

Modiv itself also has quite a bit of leverage and a relatively high payout ratio.

Therefore, it is now facing significantly higher risks than it did just a few weeks ago, and yet, its share price has barely changed.

By selling today, we are able to exit our position with a ~10% gain:

The transaction unlocked $23,000.

What are we buying with these proceeds?