Commercial Real Estate: CMBX 6 Short, RLGY Buy - Short The Debt Long Term, Buy The Equity Short Term

The CMBX 6 is a commercial real estate index composed of a laddered portfolio of BBB MBS and inferior issues. Presently, the current pandemic laws preclude the occupation of office space, malls, and public areas by companies; thus, commercial real estate will inevitably persist to decline with its pace only exacerbated by the quarantine. To short the CMBX 6, one must acquire CDS for the MBS that compose its lattered portfolio. Contrary to institutional investors, the acquisition of CDS for these MBS is restricted for individual investors, so a more viable method is to simply short the CMBS ETF which tracks the CMBX 6 and other commercial real estate indices.

Realogy Holdings was at $2.30 per share on March 18 and is now trading at $5.76, an excess of a 100% appreciation. Realogy Holdings was expected by innumerable analyst to exceed $12.00 a share as it expanded its profit margin and increased its FCF. The short term sentiment for this stock is optimistic cognizant of its recent prospects and effective capital deployment, but the long term performance of this company is uncertain considering its distressed Altman-Z Score of -0.08 and the state of the commercial real estate industry with employers now increasingly contemplating a transition to a work from home modus.