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Post by bjspokanimal on Apr 24, 2024 13:51:20 GMT -5
I mentioned on the Transocean page another, similar, contrarian turn-around play that I've been buying up shares in. That company is Medical Properties Trust. It is a REIT that invests in medical properties, primarily hospitals, and leases them to the operators of those properties. Here are some highlights on it:
Similar traits and investment thesis as Transocean.
MPW was a yawner of an investment up until the beginning of spring, 2022. It traded pretty steadily in the $20 to $21 range like REITs do, and paid a nice dividend, like REITs do. Then problems arose, and over the course of about 21 months, the stock crashed down to the low $3 range. To me, the problems appeared correctable and the likelihood of bankruptcy appeared low. Like Transocean, it looked like it could take 2 or 3 years to correct the problems, so like most turn-around plays, it requires patience, but has the potential to produce a multi-bagger return on investment. UNLIKE Transocean, MPW sports a double-digit dividend.
The problems. What caused the fall?
There are 2, main problems that trashed this stock. Firstly, 2 of it's main lessees, Prospect Medical and Steward Health, ran into problems and either stopped paying their rent, or reduced it's payments significantly. The reasons were primarily some residual problems coming out of Covid, but low Medicaid reimbursements were a main cause. Inflation of expenses played a part and some mis-management, particularly with Steward, was also a factor. The problems with Steward, which accounts for about 20% of MPW's revenues, were significant enough that MPW has lent Steward bridge loans to help them as they restructure and sell assets to recover. Prospect's problems were less severe, and mainly in California.. a tough place to run a hospital, or anything else nowadays.
The other big problem, is the run-up in interest rates. MPW, like Transocean, has a lot of debt. The debt they floated at lower, pre-2021 interest rates is now coming due and re- financing the debt involves FAR higher interest rates. The longer it appears the Fed will wait before easing interest rates, the bigger the impact on MPW.
I should also note that MPW cut their dividend almost in half last August, which also helped the stock plummet, but given how far the stock has fallen, the dividend yield currently still tops 13% (60 cents annually per share).
What's happening now and why do I like it?
The company is working on solutions which appear to be starting to raise optimism. Thus the stock's minor recovery from the low $3s to the mid $4s.
First of all, the situation with Prospect is pretty much stabilized. Prospect sold it's Utah hospital operations and MPW now has a much more solvent client running them. California, which is where Prospect has most of it's operations, raised medicaid rates there to help medical providers. Prospect is now current on it's rent with MPW.
Steward's issues are still un-resolved, but it's paying an increasing percentage of the rent it owes MPW each month. The 9 hospitals in Mass. are the main issue. Steward has promised to politicians there that they'll sell them to a new operator, possibly even a non-profit. Good news recently announced is that Steward will sell it's managed care physicians network operation to a subsidiary of United Health, which raises the probability that Steward will have funds to repay MPW loans and get current on their rent more quickly. One hospital sale to Yale is also pending.
Regarding MPW's upcoming debt maturities, rather than re-financing the debt, they are predominantly selling hospitals and interest in hospitals to raise the funds they need to pay down the debt. 2024 is already covered and they're selling $2 billion of assets in 2024 to cover 2025 maturities. This makes sense, since the cap rates on the sales are solid and these assets are valuable with relatively strong market values. The only issue, is that MPW loses the revenue from these assets, which is partially offset by lower interest expense on the retired debt.
Other considerations:
1. MPW's current dividend is about 70% of their cash flow from rents, a figure that assumes no payments from Steward. That percentage should improve as payments from Steward pick up or Steward sells hospitals to a more liquid operator.
2. There was recent concern whether or not the upcoming dividend would happen, since MPW wanted to make sure they were on track with asset sales before fully committing to paying it. The dividend was announced as forthcoming last week.
3. MPW has sold close to 80% of the assets, in just 4 months, of the $2 billion of assets it has targeted for the full year. That helped to ensure the dividend was safe for now.
4. A hospital REIT is unlike retail or office REITs in that a lot of folks consider hospitals to be somewhat "too important to fail". Indeed, the Mass. politicians have reassured Mass residents that they won't LET Steward's hospitals fail there. For that reason, I like this REIT whereas a retail or office REIT with the same problems wouldn't give me as much confidence that it would recover without BK risk.
5. Conversely to #4 above, it's getting pretty common for hospitals in the U.S. to struggle financially. Costs, insufficient medicaid/medicare reimbursements and labor shortages all contribute to that. So a risk, is that we could see other problems with MPW's operating clients so once I get a decent recovery with this investment, I'll likely sell it, hopefully in the $10 to $16 range, and not re-visit this kind of company unless the likelihood of a recovery appears to be as likely as this one does.
6. Unlike Transocean, I like that I can earn a very high dividend payout while I'm waiting for a company, and stock price recovery. 13% is in and of itself a very good return (higher for my big purchases in the low $3 range earlier this year). Of course, if things don't go well, the dividend could be cut again as it might have been for the current period.
7. Obviously, like most contrarian, turn-around plays, this, like Transocean and so many others, requires patience. It could easily take a year or 2 for enough of a recovery that investors would move the stock toward $10. So far, it seems they're ahead of schedule on their remedies, but the stock isn't up as much as I would have expected based on what's been done so far.
8. Given the asset sales, the company will be downsized a bit within a couple of years. I would not target a $20 stock price again anytime soon, but suspect I'd be happy with $10 to $16 if the company is on a good trajectory by then and it's contrarian, turn-around characteristics have gone by the wayside.
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Post by bjspokanimal on Apr 24, 2024 14:14:23 GMT -5
I should also note that it's pretty easy to get information on MPW and the hospital operating companies that impact it. Motley Fool and other columnists regularly write on the happenings with MPW and if one googles "steward", you'll get a ton of articles on their issues. It's been pretty easy to gauge any progress, or lack thereof, with how the company and those that affect it, are doing.
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Post by Blitz on Apr 25, 2024 5:48:09 GMT -5
It pays a high dividend too. I put this stock in my Roth account to avoid taxes on the divi as well as gains in price. I love tax free gains and dividends...
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Post by bjspokanimal on Apr 25, 2024 11:44:03 GMT -5
@ blitz; Yes, per a previous post I put out here, any dividends paid on this REIT are taxed at the rate that applies to one's ordinary income (up to 37%) rather than the 15% to 20% tax rate that normally applies to dividends from C-corporations. For that reason, it's best purchased in a tax deferred account like an IRA or 401k since anything earned in such an account is tax deferred and any withdrawals are taxed as ordinary income, no matter how it was earned while it was in the account.
Also, MPW is still quite profitable despite it's difficulties with it's client, Steward, and still has cash flow well in excess of it's current dividend obligation, even without income from Steward. Because a REIT like this is required by law to distribute at least 90% of it's earnings, that limits the extent to which it can cut it's dividend. That fact was pretty heavily discussed over the past couple of months when folks were wondering if MPW's issues would, or could, lead to a reduction or suspension of it's dividend that's currently due.
BTW, we are past the ex-dividend date for the recently declared dividend, which will be paid May 1st. The next dividend is most likely going to be paid in mid-June. Unlike Transocean, it's nice to be paid a ~13% annual dividend while waiting for an MPW turnaround so even if it takes a year or more for a PPS rebound to occur, it's still a very profitable investment with the dividend and given their progress with raising liquidity for their near-term debt redemptions, the dividend looks reasonably secure for 2024.
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Post by Blitz on Apr 25, 2024 15:27:17 GMT -5
Any earnings from a Roth IRA pay zero taxes ever.
With a Roth IRA, there are no immediate tax benefits, but contributions and earnings grow tax-free. All withdrawals can be taken out tax-free and penalty free, provided you're age 59½ or older and you have met the minimum account holding period (currently five years).
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Post by pyromancer157 on Apr 30, 2024 8:06:47 GMT -5
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Post by CardsFan on May 1, 2024 10:18:59 GMT -5
Nice to see you guys come around to this stock. I've been in it for years and made quite a bit of money until COVID wrecked some of the Senior Health operators. ALL of them are in recovery now. I did major ROTH conversions when the stock plummeted. Senior Housing REITs are one of the few subsectors that are in strong recovery mode, not to mention are actually getting some government support to backstop them. While I still own quite a bit of MPW, if you're looking for yield with a little more safety, and less risk, OHI is a better bet than MPW.
I'm not saying MPW is bad as a turnaround play. It's not. It's a perfect example of a turnaround play. But OHI offers the same, a high yield and less risk. I own both of course.
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Post by bjspokanimal on May 1, 2024 18:03:09 GMT -5
@ CardsFan; Yes, turnaround plays are, by definition, more risky. They are turn- around plays because they've had problems and the stock has been beaten down. Investors are afraid of them, which is why they're down and out of favor.
Warren Buffet isn't as much of a contrarian as he used to be, but people used to always clamor to know what he was investing in, and then once they knew, a typical reaction would be; "that one?... why would he own THAT one", then they'd pass on it. That's WHY he would own it, because it would be troubled and nobody liked it. The idea is to buy a troubled company with potential for a turnaround, and be in it AHEAD of when people warm up to it. A contrarian investment always has it's highest percentage gain when it first takes off. Once there are clear signs that it's turning around, it's higher, and the best money has been made.
I bought Transocean at it's worst, in between May and years-end, 2020. NOBODY wanted it and there was a risk of bankruptcy. It has returned a 4-bagger for me. For it to return a 4-bagger from it's present price, now that dayrates are higher and it's about to return to profitability, it would have to rise to $25 per share.
MPW is still not even a 1-bagger from where it bottomed out, which is a little surprising, because we're actually blessed with some pretty good indications that it's resolving it's problems at this point. That was not the case when Transocean first become a 1-bagger from a point well above it's low. And, Transocean was never paying us with a 13% dividend while we waited for it to rebound.
I'm sorry to hear you rode MPW down, CardsFan. I'm not sure how many warning signs there were back in 2022 because I didn't own it then.
Re: REITs in general, they tend to be very leveraged, so I think the overall category is somewhat attractive now as a bet on lower interest rates, although I wouldn't own any retail or office building REITs, due to online retail like Amazon and the work-from-home trend.
The biggest leverage plays, stocks that are well down from their highs from many years ago and likely to do well if interest rates begin to drop, are mortgage REITS like Annaly and AGNC. In recent years, they've produced no return, despite their sky-high dividends, as their stock prices steadily dropped. Annaly even did a reverse split. They are definitely in contrarian territory and pundits out there are suggesting they'll never turn around, which is a very serious bullish indicator for a contrarian investment.
I'm optimistic they will improve, but not as optimistic as I am for a MPW turnaround. Still, pocketing a 14% (NLY) to almost 16% (AGNC) dividend while waiting for something to happen with their PPS is a nice return for waiting for Biden's inflation to subside enough for the Fed to ease a little.
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Post by CardsFan on May 2, 2024 11:42:49 GMT -5
I rode it down because I know the Senior Sector is vastly misunderstood, especially in the REIT world. I also didn't own very much to begin with, so like I did with Melco years ago, I waited until the bloodbath started before I quadrupled my investment. I own all 3 of the big senior hospital players in MPW, Ventas and OHI. REITs are hated right now, but the Senior Housing guys are all seeing significant post COVID improvements so I have zero worries outside of MPW. I stayed with MPW because not that long ago it's management made some great decisions others weren't thinking about. Specifically, they started investing material sums outside the US when Euro bond rates were dirt cheap. It made them a ton of money. Its management team seemed to be one of the best in the business and I approved of all of it's moves UNTIL it started investing in a new area - mental health facilities. I've disagreed with that change a lot. I didn't invest in Senior Housing/hospital/facilities to get that exposure. My ex used to be a director of mental health at these places and I just don't like the business. Also, I never felt the reason to bail because I know the government has to backstop these hospitals. This was also a separate bucket of money for me. This is my high yield portfolio which includes others like NLY.
I stayed away from Transocean equity because I'm already overweight energy. I did buy RIG bonds before they started getting upgrade so I've made decent bank there, relative to typical bond returns. Those long term RIG bonds are up 15% already and rates haven't even been cut yet. When it's all said and done I figure they'll return 100% once rate cuts begin.
Main reason I won't invest more in MPW is because in terms of 'turnaround' plays, I feel CLMT is a far better option at this point. Especially with it's transition from MLP to C-corp. It's got much more potential upside than MPW with a lot less risk. It's also about to get a huge government loan, at low rates.
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Post by bjspokanimal on May 2, 2024 13:58:28 GMT -5
Thanks for the info, cardsfan.
As far as being a long term investment, I see little chance of that for MPW. Once it recovers sufficiently and investors and pundits like it again (which is a red flag for me), I wouldn't hold it even if it's dividend was attractive.
The reason, is because a lot of hospitals don't make money and there are more every day as governments become increasingly stretched and indebted and medicaid and medicare payments fall further and further behind the actual inflation with costs in the healthcare industry. I just read where most hospitals in my state, WA, are losing money, MOST of them.
But in the MPW turnaround situation, socialist politicians like Elizabeth Warren are front and center with the MA Governor declaring that Steward's 9 troubled hospitals there "will not close". So even though Government socialism is what is gradually degrading hospital care over the long haul, it is actually helping a lot with the MPW turnaround and is a factor in why I've taken a sizable stake in the company.
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Post by CardsFan on May 2, 2024 17:01:30 GMT -5
Thanks for the info, cardsfan. As far as being a long term investment, I see little chance of that for MPW. Once it recovers sufficiently and investors and pundits like it again (which is a red flag for me), I wouldn't hold it even if it's dividend was attractive. The reason, is because a lot of hospitals don't make money and there are more every day as governments become increasingly stretched and indebted and medicaid and medicare payments fall further and further behind the actual inflation with costs in the healthcare industry. I just read where most hospitals in my state, WA, are losing money, MOST of them. But in the MPW turnaround situation, socialist politicians like Elizabeth Warren are front and center with the MA Governor declaring that Steward's 9 troubled hospitals there "will not close". So even though Government socialism is what is gradually degrading hospital care over the long haul, it is actually helping a lot with the MPW turnaround and is a factor in why I've taken a sizable stake in the company. I hear you, but it's the European exposure that actually sets MPW apart. It has dirt cheap funding on hospital assets in a socialized system where you're guaranteed returns. Straying from it's core compentency into mental health is what irked me because I never like investing in companies that try to get 'cute' with growth plans. If it had excess capital and regular hospital opportunities were zero, it should have returned the capital to shareholders. Especially since I see mental health funding getting gutted in future admins as the governments struggle to pay other bills. I also don't like all the internal vendor financing type loans MPW has now engaged in. Reminds of what happened to Lucent and Nortel before they went BK. The key tailwinds are this: 1. Utilization rates are climbing in post COVID world - great for them but killing the insurers. This is evidenced and confirmed by all the players. Just look at VTR/OHI numbers reported today 2. Government backstops Primary risks: 1. Lost credibility - I could see MPW suffering from the same trap long term AT&T shareholders suffered. Shorts could easily push/hedge MPW down going long other names I mentioned, because of how the various leadership teams all responded to the crisis. I've been in most these names for a long time but the actual share price declines helped me, believe it or not, because I was able to convert traditional to Roth shares for pennies on the dollar. Take Ventas for example. When COVID hit, these names were all trading at 10 cents on the dollar. There was a small bankruptcy risk of course, but I knew government would step in, so I chose to convert these shares instead of other holdings. I mean I did convert some other stuff, but it's rare you can find a name trading at 5 to 10 cents on the dollar that you know isn't going BK. Ventas is still in recovery mode and did cut it's dividend, but given it's going from 12 back up to 45-50, I doubt I'll ever find too many chances do do conversions like that. VTR was trading at 65-72 pre-COVID so like MPW and others, it will rise as occupancy rates continue to return to historical levels. Heck, occupancy is just back up to 80% ish, and 95 is the norm. You guys should check out CLMT when you get a chance. There are some VERY knowledgeable folks on it's Seeking Alpha board and the window to get it cheap is closing fast. Only reason I can't buy more is I have it in ROTH and I can't risk a larger UBTI issue upon its upcoming C-corp conversion. But for new shareholders that's not much of a risk seekingalpha.com/article/4678966-calumet-specialty-products-huge-increases-in-cash-flows-may-be-imminent-downgradeMy guess is Chevron/Shell buys it, or Valero does, post C-corp convert. My other turnaround play is Paramount but that's a short term trade. I don't think it's got the upside/return oppty CLMT has. And far more risky because of Redstone's controlling share. Only other 'turnaround' name I'm in is ATSG. I'm not mentioning it much because that turnaround will take more than this year to play out. They are a cargo carrier for Amazon/DHL and Amazon owns about 20% of the company so I don't see it going BK unless Amazon were to bail which isn't likely.
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Post by bjspokanimal on May 5, 2024 17:40:42 GMT -5
Good post above, I'll look at a couple of those. Re: post covid utilization helping MPW but killing the insurers... an insurer in WA is currently experiencing hardball with a hospital group "multicare". Multicare's big cost increases has them seeking big reimbursement jumps from the insurer, who is balking. Local headlines are warning that thousands of insureds locally may lose access to their physicians in the multicare network. I think we're going to see a lot more of these kinds of battles as hospitals struggle to stay out of the red. Discharge social workers at my local multicare hospital have told me that at any given point in time, they typically have 2 to 5 dozen beds occupied by medicaid recipients who don't need hospital care but have nowhere to go because they're LTC eligible but there are too few LTC beds available willing to accept medicaid. It's these kinds of dynamics in U.S. hospitals that make me very wary of MPW as a long term investment beyond my current turn-around strategy with it. I appreciate MPW's non-U.S. diversification as a buffer that heightens my confidence in it as a turn-around strategy for now.
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Post by pyromancer157 on May 6, 2024 6:33:26 GMT -5
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Post by bjspokanimal on May 6, 2024 19:52:30 GMT -5
Chapter 11 was one solution that's been considered the end game for Steward. There are a lot of moving parts to this, but in general, MPW's exposure is less than that of most unsecured creditors. The stock plummeted initially, but recovered a lot once folks came around to the reality that the sum total of impact on MPW was already pretty much baked into MPW's two year slide from $22/share down to the current mid- $4s and now we have the greater certainty that the court and the patient-focused politicians will see it through to an orderly conclusion.
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Post by bjspokanimal on May 7, 2024 12:07:37 GMT -5
There is one aspect of MPW's relationship with Steward, which was MPW's biggest client providing about 19.5% of it's lease revenue. That aspect is MPW's recent lending to Steward, which is sometimes characterized as throwing good money after bad.
What is missed by that, is the nature of the financing and the fact that it has been done with the caveat that it increasingly positions MPW in a senior position in the event of the bankruptcy that is now occurring.
With each infusion of capital MPW has provided, it has done so by conditioning it on securing the infusion, and past debt obligations as well, with assets whose value sufficiently cover the amount of the loans. In bankruptcy, the disposition of such assets' value flows to MPW ahead of any other debtor. Last year's $140 million, asset-backed credit facility was crafted by MPW with a good understanding of the likelihood of a Steward bankruptcy.
The most recent loan from MPW to Steward, a debtor-in-possession loan of $75 million plus another potential $225 million, was designed for a simple purpose: Steward must sell it's valuable managed care business, the proceeds of which would go toward relinquishing it's debts with MPW and Steward must also work toward selling it's hospital operations to new, sound operators. That financing dictated that chapter 11 would happen if the managed care operation wasn't sold and since it's sale is exceeding the amount of time allotted, chapter 11 is now happening. It was designed to not allow Steward to sit there and continue to lose money for longer than a set period of time.
Usually, debtor-in-possession financing is a loan issued to keep a company operating while IN bankruptcy but sometimes, as in this case, it also serves as a pre-bankruptcy vehicle to avoid bankruptcy if something about the company (in this case, Steward's managed care operation) has enough liquidating value to forestall bankruptcy. It now will serve as operating financing while BK reorganization proceeds.
Uniquely, DIP financing receives top priority for re-payment in bankruptcy, given it's purpose of facilitating the bankruptcy process. Some are saying that MPW is now less likely to provide the remaining $225 million of DIP, now that Steward is in chapter 11, but that's not necessarily the case. It will now be up to the judge to decide that, but it's the judge's obligation to tap that money with full recognition of MPW's right, and ability, to be remunerated those funds at the conclusion of the reorganization.
There is also the possibility of a hospital closure or 2 as part of the BK outcome. Steward has already closed a MA hospital, however, and that has resulted in the MA Governor and 2 Senators to reassure the public that they don't want any more to be closed. That could mean that public funds could enter into a solution for their continued operation, along with MPW's DIP funding.
There are still a few risks for MPW. The deferred back rent due from Steward is senior to unsecured debt, but if unsecured debtors come away with nothing, some of that back rent may never be recovered. MPW also has a 10% ownership stake in Steward, which is probably toast.
But beyond Steward, MPW's other clients' rents cover about 142% of MPW's current dividend and MPW has raised 80% of the money it needs to cover debt maturities over the next couple of years. Concern about the most recent dividend being paid was only contingent on getting 100% of that money by next New Years day so once they hit the 80% mark, the dividend was fully ensured.
The issue with Steward will drag on awhile, but not as long as it would have without BK. Patience is still needed for a stock price improvement, but the dividend looks secure for the time being, at almost 14% currently.
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Post by CardsFan on May 7, 2024 12:18:09 GMT -5
Good post above, I'll look at a couple of those. Re: post covid utilization helping MPW but killing the insurers... an insurer in WA is currently experiencing hardball with a hospital group "multicare". Multicare's big cost increases has them seeking big reimbursement jumps from the insurer, who is balking. Local headlines are warning that thousands of insureds locally may lose access to their physicians in the multicare network. I think we're going to see a lot more of these kinds of battles as hospitals struggle to stay out of the red. Discharge social workers at my local multicare hospital have told me that at any given point in time, they typically have 2 to 5 dozen beds occupied by medicaid recipients who don't need hospital care but have nowhere to go because they're LTC eligible but there are too few LTC beds available willing to accept medicaid. It's these kinds of dynamics in U.S. hospitals that make me very wary of MPW as a long term investment beyond my current turn-around strategy with it. I appreciate MPW's non-U.S. diversification as a buffer that heightens my confidence in it as a turn-around strategy for now. Today, Amazon announced it's increasing it's stake in ATSG. I think the days of getting it under 14 are over.
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Post by CardsFan on May 9, 2024 12:15:08 GMT -5
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Post by bjspokanimal on May 9, 2024 12:35:34 GMT -5
Thx. I listened to the call this morning, but I'm more visual than auditory so the transcript will do me good. No surprises on the call so I'm not surprised with the stock's strength in the wake of it. I added a tranche myself at $4.415. I particularly liked the response to a question about Steward's marketing of it's hospitals to sell. The answer was that it's a process that's been going on for months, so it's not as though they aren't already well along with it. When asked about how many hospitals Steward will sell (as thought Steward would still be operating any of them), the CEO responded almost 100%. Not sure where the term "almost" applies to the answer. They were also comfortable reducing the size of their revolver, which would seem to indicate that their liquidity efforts are comforting and that the prospect for getting good prices and timeliness for additional asset sales is sound. I should add that if Steward sells any hospitals to other operators who prefer to own the real-estate their associated with, that may be an additional conduit through which MPW can monetize assets for debt retirement.
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Post by bjspokanimal on May 13, 2024 9:42:36 GMT -5
I don't see any news that would account for the move today.
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Post by CardsFan on May 16, 2024 13:10:01 GMT -5
The good news is there's still time to add. I took a few days off and came back to my accounts and with the DOW now at new highs, I've got to lock in some gains and may buy more MPW. Of course, that's not a done deal as there are plenty of other growth names that are still on sale.
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Post by bjspokanimal on May 17, 2024 14:15:34 GMT -5
The price jump seemed to be a delayed reaction to the earnings call after folks reviewed it over the weekend following the call. I think there was optimism that the Steward situation is much less of a mystery now and likely more certainty via the bankruptcy court. For example, there were no parameters on how long Steward would take to sell hospitals previously, but now there are deadlines and, I would add, more structure to it that politicans and debtors can use to iron out their own strategies. Investors like higher certainty and dislike the unknown.
Much of what I like about this play, is the dividend I'm getting while I wait for resolution. At these prices, that yield really gyrates around too. Here is the current yield at different recent or prospective stock prices:
$10 stock price = 6% yeild $8 stock price = 7.5% yield $6 stock price = 10% yield $5 stock price = 12% yield $4 stock price = 15% yield $3 stock price = 20% yield
So far, the lowest yield I've locked in was a 13.8% yield and I have enough MPW that I doubt I'd buy more unless I could get over 13%.
Another issue, is that many interpretations of how much debt Steward has includes $6 billion attributed to the sum of the rent it will owe on it's hospitals over the next 17 years. I think that's strange... it's a contractual obligation, not a "debt". A Motley Fool author highlighted it the other day in a negative article on MPW.
But let's say that MPW sells hospitals to another more viable operator and the bankruptcy judge approves a 10% haircut on the rental contracts. Assuming the deal is ALL of Steward's hospital, (not actually, but just for the sake of clarity here), then suddenly, $5.4 billion of that so- called "debt" suddenly just vanishes into an "obligation" of the new lessee of those hospitals.
Of course, such a scenario would remove $600 million out of MPW's future income streams, but the specter of missed rental paymernts by Steward would be eliminated and MPW would likely receive good consideration of Steward's unpaid back-rent with such a haircut.
I've seen similar analogies with the U.S. government. We all know that the national debt is approaching $34 trillion. But if you add to that all of the future spending obligations of the government, offset by projected revenues, over the next 25 years, the result is well over $120 trillion. Of course, we aren't over $120 trillion until we GET there, but it's useful information to know how much things would have to change in order to prevent the civil armageddon that would accompany such irresponsibility.
Steward's bankruptcy judge can help eliminate the possibility of such armageddon, although I see little chance that politicians have the stomach to avoid America's approaching armageddon.
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