Seeking Yield? Don't Overlook This Nontraditional REIT

Eric Compton: Iron Mountain is a nontraditional REIT which does not screen well and which operates in a niche business without any true peers. We think this can lead to opportunities in the stock as it can be easily overlooked by investors.

Iron Mountain primarily provides document storage for enterprises, which is an ostensibly unattractive business. We think enterprise document storage is likely to be around for decades to come, even with the progress of digital storage technology over the last 50 years. We also believe Iron Mountain possesses a narrow moat, based on the presence of switching costs, as the firm possesses a 98% retention rate; intangible assets, based on existing relationships and unmatched retrieval accuracy for important client assets; and efficient scale within the large enterprise storage arena, where we estimate the firm has a near monopolylike market share.