Bridge Investment Group (BRDG) Stock

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Contributor, Benzinga
August 11, 2021
$6.68
-0.11[-1.62%]
Last update: 8:59AM (Delayed 15-Minutes)
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Open6.740Close6.670Vol / Avg.215.964K / 306.025KMkt Cap274.008MDay Range6.580 - 6.83052 Wk Range6.180 - 13.070

Traditionally, the embodiment of the American Dream was homeownership. Easily one of the best investment decisions you can make, buying a home facilitates building wealth for yourself, not for a landlord. Real estate provides potentially robust passive income revenue streams, particularly if you live in a high-profile metropolitan area.

Unfortunately, because of the COVID-19 pandemic’s unprecedented disruption, the housing market went berserk, leaving many buyers on the outside looking in. That’s why real estate manager Bridge Investment Group’s initial public offering (IPO) is intriguing. By siding with the professionals, public investors have another pathway to wealth accrual.

Bridge Investment Group Financial History

When the COVID-19 pandemic first breached U.S. borderlines, the crisis threw the entire commerce infrastructure for a loop. Most notably, the sudden drop in foot traffic devastated the consumer discretionary market, which then translated to missed revenue opportunities for multiple industries. To mitigate both the public and economic impact of the SARS-CoV-2 virus, state and federal authorities initiated lockdown measures, along with financial support to bolster consumer confidence.

The unique dynamic of this public health crisis created a strange dichotomy in the housing market. At first, many prospective buyers sat on the sidelines, anticipating that a deflationary wave would induce lower prices. Instead, residential real state went on the opposite trajectory. Booming to incredible heights, this dynamic caused panic among buyers, who reasoned that they better get in now before prices moved any higher.

Cynically, the skyrocketing valuations in housing set up a lucrative environment for residential real estate management firms, such as Bridge Investment Group. According to its S-1 filing, net income attributable to the company registered $146.9 million in 2020 from a total revenue of $231.9 million. A 63% revenue-to-income conversion rate — despite the destruction of the pandemic — speaks to the fruitfulness of the underlying sector.

Moving forward, the expected normalization of society could inspire IPO investors to pay a higher-than-normal premium for BRDG stock. For instance, a similar publicly traded company, Mid-America Apartment Communities (NYSE: MAA), featured a price-earnings (PE) ratio of 43 in 2019. The following year, the PE ratio jumped to nearly 58, then to 63-times earnings during the first quarter of 2021.

Because Bridge Investment covers both multifamily and affordable housing units, the company will play a relevant role in the post-COVID era. Therefore, it might not make sense to assess BRDG stock on its current financial status but rather its expected premium based on peer comparisons.

Bridge Investment Group Potential

According to information provided by Fortune Business Insights, the global property management market could reach over $28 billion by 2028, representing a compound annual growth rate of 9.3% from 2021. Combined with an eventual recovery trek in both personal and professional activities, property management firms may benefit from a demand boomerang effect.

First, while no one can predict where the housing market will eventually end up, little evidence exists that it will correct to the downside. Instead, as a recent article by “The Washington Post” noted, only the fast pace of growth has slowed. However, the prices themselves are still rising, which is becoming incredibly problematic for everyday buyers.

Instead, many home seekers priced out of the market may turn to property management firms, effectively pooling their funds with other discouraged buyers to secure wealth-building opportunities in real estate. Though it’s not quite the same as direct ownership, at the moment, an investment in BRDG stock and its ilk is the most realistic and viable alternative in this sector.

Second, Bridge Investment Group manages properties in the commercial and professional markets, including office spaces, development, and logistics net lease and properties. Here, the rebound effect from revenge shopping — basically, consumers reclaiming their normal activities as coronavirus infections fade into the rearview mirror — should filter down into every segment of the economy.

Ultimately, then, Bridge Investment provides retail buyers an opportunity to advantage not only the residential bounce back but also the restoration of commerce. So, BRDG stock might command a surprising premium following its IPO.

How to Buy Bridge Investment Group (BRDG) Stock

Although the introduction of new shares provides the possibility of tremendous upside, public market debuts carry significant risks. Primarily, retail buyers don’t get the best deal as they usually must buy new equity units at the open.

In contrast, privileged investors and entities can buy shares (assuming underwriter acceptance) at their initial selling price. Underwriters often price their IPOs below their expected market value to entice their best clients — mainly institutional investors — to continue participating in new offerings.

Herein lies the advantage to retail buyers: They can pick and choose the IPOs they want to participate in. Also, the process of acquiring IPOs at the open is easy if you already know how to buy stocks. If you don’t, just follow the steps below.

Step 1: Pick a brokerage.

When the internet first gained public acceptance, online brokerages competed heavily on price. Now, the advent of mobile trading apps essentially negated the pricing paradigm as virtually all consumer-level platforms feature commission-free trading.

Instead, the competition among brokerages comes down to convenience, educational opportunities and access to derivative markets and vehicles. Below is a list of the best brokers to consider.

Step 2: Decide how many shares you want.

The share count is a vital component of your investing strategy as it determines your risk-reward profile. A higher count opens the door to more profitability but simultaneously exposes you to greater risk. Therefore, pick a number that balances conviction with risk tolerance.

Step 3: Choose your order type.

Before diving in, familiarize yourself with these market concepts.

  • Bid: The bid is the highest price a buyer will offer. It is always lower than the ask.
  • Ask: Conversely, the ask is the lowest price a seller will take. It is always higher than the bid.
  • Spread: The difference in the bid and ask price, the spread also signifies market liquidity and risk profile. Tighter spreads indicate healthy demand due to buyers and sellers’ willingness to negotiate. In contrast, wider spreads indicate less demand and more risk.
  • Limit order: Trade stock at a specific price with a limit order. Be aware that there is no guarantee the market will fulfill it.
  • Market order: For quick, convenient trades, place a market order. Buy orders execute on the ask and sell orders on the bid.
  • Stop-loss order: A downside protective mechanism for your portfolio, a stop-loss order exits your position at either a predetermined price or the next available price, whichever comes first. Volatility between sessions (gap-down sessions) could result in unfavorable execution.
  • Stop-limit order: To implement price specificity with your automated exits, use a stop-limit order. However, if volatility persists, you would have been better off with a stop-loss order.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Execute limit orders with the same sequence above, except that you also enter your desired execution price.

Making Lemonade from the Housing Lemon

Perhaps no consumer demographic felt more economic sorrow from the COVID-19 pandemic than those who were about to close on a deal, only to back out because of the implications of the incoming public health crisis.

In hindsight, they should have signed the papers. Today, many would-be buyers are simply priced out of the market. Without a clear corrective pathway, these people may have no choice but to pull funds into property managers, perfectly suiting BRDG stock.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.