Buy health care, drop commercial real estate amid post-Covid recovery: Chuck Lieberman

let's dig into the weakness that we're

seeing within the Financial Group even

on the back a better than expected

quarterly results from Goldman as well

as Bank of America but you can certainly

quibble with the quality at Goldman and

certainly investors are doing that our

next guest is actually spending a lot of

time doing homework within the

financials looking for opportunities

let's bring in check Lieberman he's

Chief investment officer and managing

partner at Advisors Capital Management

Chuck thanks so much for being with us a

lot of stress and anxiety about what are

the financials going to tell us about

the health of the financial system and

their ability to perform against that

backdrop on that measure what has your

key takeaway been of these Bank stocks

well unfortunately we're right in the

middle of the reporting season for the

banks we've gotten data from the large

Banks and as expected they saw big

deposit inflows coming presumably from

the smaller Banks which haven't reported

yet and that's where the stress is the

expectation is that the smaller banks

are going to see outflows they're going

to report deposit outflows that'll put

their balance sheets under a bit of

stress and the question is has the

market already discounted all of that

stress I would say though that hasn't

been that has been the narrative going

into it but not necessarily what has

shown up in results for example PNC

managed to grow deposits a little bit

Bank of America the Big Money Center

Bank saw deposits pull back uh from last

year so there's a little bit of kind of

muddling out there is is that maybe why

we're not seeing at least today kind of

that big rush into Bank of America even

though they were able to deliver in

other areas of their business

well I think we had a big bounce after

Friday's reports of the some of the

major Banks and those were much much

better than expected uh now we're just

bouncing around I think uh the ultimate

uh test will be as the smaller

institutions report because those are

widely expected to show sizable declines

in deposits pretty much across the board

it won't be as muddled as for the larger

institutions so that's where the the

rubber hits the road and and that's

where the concern is that if they see

lower deposits they can't afford to lend

as much and that'll hold back uh

investment in housing and real estate in

particular which are large focuses for

those Regional banks are you buying Bank

stocks today

well I bought a bank stock just a week

ago uh I put some more money into the

sector we bought shares in Fifth Third

which is a large relatively safe

Regional we see it as ultimately a

beneficiary of what's going on

um so yeah we see the banks is offering

very very good value at prevailing

prices Fifth Third

award in two days on anxiety issues like

loan growth and

you think that there's a good chance

that they're able to show some strength

well I think that the stock already

discounts a lot of weakness more

weakness than I think is deserved

within the financials group there's a

lot of concern about real estate

exposure we talked about this at the top

of the 10 o'clock hour that we're going

to start to hear more and more Banks

talk about things like commercial real

estate and their exposure there how are

you thinking about that piece of it

well there's no doubt that uh commercial

office space is very weak in the U.S

um we're seeing uh weakness pretty much

across the board obviously work from

home is part of the problem

um Rising rates is another part of the

problem uh so that part of the market is

very very weak but as a read analyst I

read recently argued that represents

three percent of all commercial real

estate there are lots and lots of other

sectors within commercial real estate

everything from shopping malls shopping

centers uh uh industrial properties of

apartment properties

there are many health care it's a very

very diverse sector and we don't find

any great value in the office space we

think there's some risk there

um I have done a little bottom fishing

in that sector with Vornado uh so we

have some exposure but the opportunity

the largest opportunity that I see is in

health care uh specifically in nursing

homes uh that sector got decimated

during the pandemic of course and since

then it's been coming back uh occupancy

is recovering their biggest problem is

it's tough finding workers they're

having to pay more for workers and

government payments for nursing homes is

rising but just not Rising very quickly

so that's put some pressure on

profitability let's talk about what well

you just want to use a stock is an

example of one of those ideas you're

holding's Omega health care I think is a

play on what you're talking about a

dividend yield of nearly 10 percent is

that sustainable

we actually own Omega we think that

dividend is sustainable and we expect

the uh the situation there to continue

to improve Rising occupancy Rising rates

uh ultimately we think this will pay off

in a big way

and generally people look to the reads

for income which is a major part of what

you do you you manage an income

portfolio what is the risk reward of

buying a Reit right now that yields say

six percent versus just putting it in

you know what's been popular to do at

least to talk about is just a six month

T bill

so in the case of a six-month T Bill

you're locking up that yield for six

months uh so in six months if

expectations of a recession proved to be

accurate uh six month T bills will then

yield much less than six percent

um in the case of a Reit

um that business is not going away uh

the ultimate

growth of that business will provide

more cash flow and there are lots of

companies in that yield range six

percent give or take where we expect to

see solid growth over the coming five

ten years so we think of of REITs as

vastly more attractive than treasuries

uh that's not to say you should ignore

the treasury markets it's obviously a

very safe it provides a high level of

assurance to investors so people who are

nervous about Market fluctuations or to

have some of their portfolio in very

safe fixed income but as Silicon Valley

proved just buying long-term safe

treasuries is not safe that's