Public Storage (NYSE: PSA) is a real estate investment trust that has characteristics that might draw in multiple classes of investors.  Certainly you know what the company does as you have probably driven by one of its facilities or have probably even been a client.  It has been argued that there is a glut of storage units across America, but Public Storage has so far proven to be a winner for income investors and moderate growth investors alike.

The company also owns a 49% equity interest in Shurgard Europe. It released earnings and raised its dividend last week.  In that report, its revenues for the Same Store Facilities rose 3.4% and it raised its dividend by nearly 20%.  The company listed some 1,931 facilities that are stabilized and owned since January 1, 2009 with some 121.6 million net rentable square feet that represents about 94% of PSA’s aggregate net rentable square feet of our U.S. consolidated self-storage portfolio.

After looking at the new $0.95 payout and a $116 handle, PSA does still offer new investors a dividend yield of just over 3.25%. Two competitors for storage space are Extra Space Storage Inc. (NYSE: EXR) and Sovran Self Storage Inc. (NYSE: SSS).  Extra Space Storage is also a REIT and it pays a yield of about 2.7%.  Sovran Self Storage is also a REIT and has a higher yield of about 4.4%, but it is smaller and trades with much thinner trading volume each day.  There is also the AMERCO (NASDAQ: UHAL), the parent of U-Haul, but it is not a REIT, it is smaller, it is thinly traded, and it offers no dividend.

A fresh report this morning from Gleacher & Co. remained positive on operational improvements.  It cited increased tenant demand and partly refutes the storage oversupply myth as it noted “the absence of new supply.”  PSA was listed as high occupancy being above 90%, and it noted the seasonally strong second and third quarters ahead.

Gleacher noted acquisition possibilities for the company and talked up its past dividend growth, but also noted, “We maintain a positive stance for the shorter lease sectors such as apartments and storage. PSA offers a mix of both defensive and offensive qualities—defense from its balance sheet strength and well-covered dividend, and offense from improving operations and growth from acquisitions.”

Thomson Reuters has a consensus price target of only $110.58, but Gleacher & Co. reiterated its ‘Buy’ rating and it raised its target by $3.00 to $125.00.  Shares are at $116.51 today and the 52-week range is $85.04 to $118.88.

JON C. OGG

JON C. OGG

Abercrombie & Fitch (ANF) Started as Buy at Brean Murray.
American Electric (AEP) Raised to Buy at KeyBanc Capital.
Bucyrus (BUCY) Raised to Neutral at JPMorgan.
Extra Space Storage (EXR) Raised to Buy at Citigroup.
Infineon (IFX) Raised to Buy at UBS.
Joy Global (JOYG) Raised to Neutral at JPMorgan.
LG Display (LPL) Started as Buy at Collins Stewart.
Time Warner Cable (TWC) Raised to Buy at Collins Stewart.
United Therapeutics (UTHR) Started as Buy at Lazard Capital Markets.
Wynn Resorts (WYNN) Raised to Buy at UBS.

JON C. OGG

We have prepared these in alphabetical order, and you will probably besurprised at just how low some of the dollar amounts are in some ofthese margin calls.

Allied Capital Corp. (NYSE: ALD) director Robert Long has had aninvoluntary stock sale of 5,281 common shares at an average price ofabout $3.88.  This is merely a total of about $20,491…. and Longdirectly held 15,005 shares after the sale.

Last week, Extra Space Storage Inc. (NYSE: EXR) Chairman and CEO,Kenneth M. Woolley, voluntarily sold 350,000 shares of the Company’scommon stock.  While it was voluntary rather than involuntary, it wasnoted that proceeds were used to partially pay down the outstandingbalance on a margin loan secured by Mr. Woolley’s common shares.  Whilethese sales were noted as being related to certain contractualobligations, it was also noted that there had been no default or margincall.  This sale amount was roughly 15% of his total holdings.

Last week, PDF Solutions Inc. (NASDAQ: PDFS) VP Andre Hawit hadinvoluntary sales of 112,608 company shares at sale prices of $2.44 to$2.58 to meet a margin call.  Hawit reported selling 67,477 shares onthat prior Monday for $177,998 to meet a margin call.  It looks like hestill beneficially owned 653,194 shares after this last sale.

Last Friday, Talbots Inc. (NYSE: TLB) President & CEO TrudySullivan involuntarily sold 51,005 pledged shares to satisfy marginrequirements under a credit line.  Sullivan appears to have pledged theshares as collateral against a loan with a financial institution.Sullivan appears to own 336,500 restricted shares and 108,333 vestedstock options and 292,767 unvested stock options, but it appears thatno additional shares held by Sullivan in Talbot’s are subject to pledge.

TXCO Resources Inc. (NASDAQ: TXCO) director Jon Muckleroy sold 5,000shares at $3.06 for a total gross proceeds of $15,300.00… to covermargin calls.  He still holds direct ownership of 93,000 company sharesand indirect ownership of 117,000 shares.  While this is a very smalldollar amount, this stock has lost some 75% over the last six weeks.

• There was a much larger list of margin calls; Stock Tickers: AIV, BSX, CPE, CHK, DNR, LTM, PROV, PHM, SPA, STRL, WSM.

If the markets keep doing anything at all like they have been, get used to these margin calls against corporate insiders.  There will be more.

Jon C. Ogg
November 19, 2008

As u-Store-It was already closer to lows, had seen more selling, is only a $693 million stock market cap, and is generally far less representative of the entire extra-storage space property sector… the sector is following the lead of Public Storage.

Public Storage posted funds from operations excluding items and excluding currency of $1.16, while estimates were $1.24.  The company attributed a shortfall compared to estimates as being due to higher than expected domestic expenses.  The company also showed a decrease in per square foot occupancy from 90.1% in Q1 2007 to 89.5%, although that was offset by a 3.8% increase in rent to $13.82 per annual square foot.

After looking over the books, the company is actually in great shape financially and it should have more than enough to keep repurchasing shares and to keep paying out its dividends.  The bad news is that it is no longer believed to be cheap on an underlying real estate land-bank basis.

With a $14.9 Billion market cap after a 5% drop today to $87.14, this one looks fully valued based on the current valuations and based on the current economic climate.  Its 52-week trading range is $65.66 to $98.01. Five years ago, this was trading at about $36.00 per share.

This is also weighing on a few related companies today. Extra Space Storage Inc. (NYSE: EXR) is seeing shares trade down over 1% at $16.74 and Sovran Self Storage Inc. (NYSE: SSS) is seeing shares down over 1% at $43.13.

Jon C. Ogg
May 9, 2008