We came across a bullish thesis on JBG SMITH Properties (JBGS) on Raging Bull Investments’ Substack by Jake LaMotta. In this article we will summarize the bulls’ thesis on JBS. JBG SMITH Properties (JBGS) share was trading at $18.45 as of Sept 17th.

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JBG Smith's recent Q2 update highlights a solid performance with positive trends across its portfolio, reinforcing the investment case for the company. Multifamily assets continue to show impressive results, with net operating income (NOI) growing 3.4% sequentially and renewal rents increasing by 8.6%. Occupancy has improved significantly, reaching 96.9% from 94.3% in the previous quarter. This robust performance in multifamily properties is set to continue, given that only about 4% of the inventory in the Washington DC area is currently under construction, suggesting limited new supply and sustained demand.

In addition to these strong fundamentals, the newly completed asset at 1900 Crystal Drive is outperforming expectations. This high-quality multifamily property is leasing up faster than any previous asset in the portfolio, currently at 50% leased. Once stabilized, this asset is expected to materially enhance NOI and, consequently, net asset value (NAV), reflecting positively on the company’s overall valuation.

While the office segment remains under pressure, JBG Smith reported its strongest leasing quarter in three years, signaling potential stabilization in this segment. The company has also been proactive in managing its portfolio, aggressively repurchasing shares. Year-to-date, JBG Smith has bought back 8.6 million shares at an average price of $15.37, totaling $132 million. This significant buyback represents 36% of the fully diluted shares outstanding since 2020, underscoring the company’s commitment to returning value to shareholders.

Furthermore, JBG Smith has continued its strategy of removing underperforming office assets from its portfolio, which should contribute to market stabilization over time. Despite a decline in adjusted funds from operations (AFFO) due to these strategic asset removals, the company’s AFFO remains adequate to cover its dividend, with a payout of $0.175 per share scheduled for August 21.

Overall, JBG Smith’s portfolio is well-positioned with high-quality assets at attractive valuations. The positive developments in multifamily operations, strategic asset management, and aggressive share repurchases make the current stock price appealing. The ongoing improvements and strategic initiatives suggest that JBG Smith remains a strong investment choice, with promising prospects for future growth and shareholder returns.

JBG SMITH Properties is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held JBS at the end of the second quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of JBS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JBS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.