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Stanley Barton  

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  • The Self-Evident Truth About Healthcare REIT Valuations [View article]

    Thank you for a very informative and enlightening analysis. I own several of these, and I will offer some contrarian points for consideration.

    First, I believe the property type weightings are from asset value data (balance sheet) rather than revenue (income statement) from each asset type, although FAD starts with revenue. I think you will find that certain asset types contribute higher profit margins and a higher percentage of revenue, commensurate with risk.

    My personal opinion is that Senior Housing, currently the subject of a Congressional Committee concerned that many seniors are being priced out of the market by high rents, is quite vulnerable to pricing pressures, either from government intervention, but more so from low-cost, subsidized competition. The high valuations make the sector susceptible to a steeper fall...just my opinion. In conference calls, hospital CEOs articulate that the visibility of their rates is pretty clear now, after some years of concern after Obamacare first became law. The visibility for Senior Housing rates is less clear to me until this issue is resolved and solutions, if any, defined.

    I could quibble with the comment that loan income is a negative, especially when the majority of the loans outstanding are variable rate arrangements, as is the case with MPW, that will contribute higher income in a rising rate environment.

    Speaking of MPW, according to the tables, it has the highest current FAD growth, lowest price to FAD and the highest distribution yield of all the listed stocks, which apparently conflicts with the thesis that higher FAD growth deserves higher valuation. According to this analysis, MPW should be a screaming BUY. I do not think that MPW is being penalized so much for its loans or hospital business, as much as recent issuance of more shares (at a much higher price than today's, incidentally). I think that MPW is a bit of an aberration, as this one skews the analysis by a short-term oversold situation, and you are probably wise in excluding it from the comps.

    "For example; why does HR, with zero dividend growth over the last several years, sell at the highest current of 2013 price/FFO valuation and a below sector average yield? Why does OHI, which has out-performed the sector for several years when it comes to dividend growth, sell at the lowest 2013 price/FFO valuation and a well above sector average yield?"

    The subject of dividend growth is not as black and white as many think. Since they must distribute most of their income, when excess funds accumulate, REITs can either raise the distribution or issue more shares and keep the payout stable, or a combination. For instance, the MPW management strategy has been to utilize high funds growth to regularly issue more shares to obtain financing for accretive growth acquisitions, while maintaining coverage for a large but stagnant distribution. Income investors and traders do not like this, but high-margin business expansion can be a good thing in the long run. I think this may answer your question why some of the stocks with poor dividend growth are still valued generously.
    I do understand that you recognized up front that there were several factors that could modify the valuations. Having said that, I believe that your thesis makes good sense and accurately sheds light on some misunderstood valuations.
    Sep 8, 2013. 02:25 AM | 4 Likes Like |Link to Comment
  • $2 Med Stocks With Macro Tailwinds [View article]

    Here is the contact info from the earnings release...I have not contacted them:

    Surie Liu
    +86 10-5166-0080

    I have in the past discussed this company with the following contact:

    The Equity Group Inc.
    Adam Prior, 212-836-9606
    Senior Vice President

    I do not know if Adam is still involved. DHRM is a long-term value holding in our portfolio, so I am not checking with them so often, especially as they appear super-undervalued right now.

    I hope this helps.

    Sep 1, 2013. 03:08 PM | Likes Like |Link to Comment
  • Q2 2013 Disclosures Affirm Reading International Remains On Track Yet Undervalued [View article]

    Thanks very much for the answers. Following the company for a couple years, I did sense that the management of RDI is quite savvy in their transactions. Good to know Mr. Cotter is tax-aware...not always the case.

    Aug 13, 2013. 04:14 PM | Likes Like |Link to Comment
  • Q2 2013 Disclosures Affirm Reading International Remains On Track Yet Undervalued [View article]
    Thanks for the informative article. I am an investor in RDI and have patiently awaited its discovery. Actually, I also love the Angelika film centers...a much better movie experience than other cinemas.

    I have two questions:

    1. In the latest report, RDI volunteered that it had $10MM in cash "not restricted by loan commitments." I suppose that it was trying to indicate that it had good coverage for its debt and ability to borrow more if it wanted. However, this is also a hint that RDI could pay a nice dividend if it chose to. I sometime think that RDI could convert to a REIT and possibly do better in the market...thoughts?

    2. If RDI has all the tax losses to counter income, why did it pay 29% tax on income in the latest quarter?

    Although I would like RDI to be discovered, I also feel comfortable with its value, and I enjoy going to the Angelika and knowing I own a piece of it.

    Aug 13, 2013. 11:33 AM | Likes Like |Link to Comment
  • Acme Delivers Jet-Propelled Growth With Innovative Products... Beep! Beep! [View article]

    Thanks. I noticed ACU has gotten some attention lately...maybe from this article. It is a nice company with earnest and honest management.

    Jul 31, 2013. 08:28 PM | Likes Like |Link to Comment
  • How To Play The Surge In Precious Metals [View article]

    Thanks for the informative and well-executed article. I do have a different opinion about investing in gold ETFs. Basically, these vehicles are required to keep a wide variety of miners in their holdings, and I believe that many miners are about to report seriously disappointing earnings, if not this quarter...then the next. These will be accompanied by announcements of shutdowns of marginal operations, lay-offs and canceling expansion and exploration plans. This is the result of the spot price being near or below the "sustaining cost" of many miners. I think that picking individual miners with low costs will prove much sounder than ETFs which will necessarily absorb the hits of several disappointing holdings. At this time, careful research and watching a few eggs in the gold miner basket will beat blanket diversification with a fund that dilutes the good with the bad...just my two cents.

    You may want to check my SA article on the subject:

    Thanks again,

    Jul 23, 2013. 12:16 AM | 1 Like Like |Link to Comment
  • Refreshing Our Best-Of-The-Best Dividend Portfolio [View article]

    This group represents stocks that have appeared in previous articles because they had some characteristic that would create growth or a special situation or simply were undervalued by typical metrics of PE, Price to Sales, Price to Book, Cash Flow per share, etc. These were not the product of a screen specifically for income stocks. I do not start looking just for yield. However, if I find a stock that I think is solid and happens to pay a good yield, that is all the better. As a matter of policy, even our most aggressive portfolios are expected to yield at least 2%, so we are always looking at yields. If I were to use a screen, I would probably start with something like PE<20, Price to Book<3, Prince to Sales<2, Dividend<60% of cash flow, EPS growth>5%, Yield>2%.

    Hope that helps,

    Jul 21, 2013. 11:54 AM | 1 Like Like |Link to Comment
  • Refreshing Our Best-Of-The-Best Dividend Portfolio [View article]

    We get frequent requests for a utility pick, and, as I mention, I really do not like those in general. EXC has been bad for investors, but the worst appears to be behind it. After the cut, it can afford to increase dividend in the future, so, as far as utilities go, it compares favorably with peers.

    By the way, we do not own EXC nor do any clients yet, so we are still sleeping pretty good with our holdings. Frankly, we do not prescribe to the traditional market attitude of some that "bigger is better." We are not afraid of well-run little companies your moniker (Spanish for "I...little smooth one" for readers)

    Thanks for reading the article.

    Jul 20, 2013. 03:23 PM | Likes Like |Link to Comment
  • Refreshing Our Best-Of-The-Best Dividend Portfolio [View article]

    Thanks for introducing me to HMN. It looks like it has been a big winner, and it has some good value metrics, as you mention. I need to do more research, but it looks like the PE ratio on future earnings is a little higher than the ones I am looking at and growth is slow, per YAHOO stats. I will put it on my watch list and dig a little deeper. Dividend looks solid though.

    Another small FL insurer I like is FNHC, although the dividend is a little low. It may be a good growth opportunity for those not so dividend driven.

    Jul 20, 2013. 01:12 PM | Likes Like |Link to Comment
  • Refreshing Our Best-Of-The-Best Dividend Portfolio [View article]

    BME normally declares a big special dividend at the end of the year, and I include that in the yield. BME has a large portion of realized and unrealized capital gains, so the dividend yield looks solid for some time to come, without "return of capital" treatment. This is a dividend portfolio, and I don't think there is another biotech and health care investment with this kind of reliable yield. Also, it writes call options on its holdings to increase income. Obviously, if the holdings do really well they may get called, and so the capital gains on this fund will be held back by this strategy. On the other hand, the strategy will produce income and buffer downturns.

    Hope that helps.

    Jul 20, 2013. 01:04 PM | Likes Like |Link to Comment
  • Refreshing Our Best-Of-The-Best Dividend Portfolio [View article]

    I cannot argue with any of your comments, and that is why we are keeping HCI.

    I also agree that the UVE management insisting on the precious metal investments gave me some pause, but this management is also buying back shares and is very dividend friendly. Now that the investment portfolio has been placed in more stable instruments, the Q over Q comps should be very good for UVE. All these FL insurers are doing great, I just thought a little diversification would be good considering our profits in HCI.

    I was very happy that HCI chose to increase the reinsurance coverage, as that was really the only concern that I had about their operations.

    Thanks for reading the article.

    Jul 19, 2013. 03:57 PM | 1 Like Like |Link to Comment
  • Finally, A Reason To Buy Gold Miners [View article]

    Thanks for the intro to PTQMF....looks very interesting. I should mention that a quick calculation based on the 3rd quarter report is that the break even price of gold for them is actually about $1264. Cash costs do not take into account operating costs, and they are spending on exploration and expansion, so they could lower that break-even number by slowing down the initiatives. Nonetheless, it looks like a potential winner, at $.30 a share and $.10 per share in annual free cash flow. I will need some time to analyze it to see if that is the case.

    I do know COLUF, but since I own SAND, I have not considered a direct investment in that one. I will look harder at it also.


    Jul 3, 2013. 12:37 AM | 1 Like Like |Link to Comment
  • Finally, A Reason To Buy Gold Miners [View article]
    There is a lot to like about AEM, regardless of the Zack rating (which is probably bullish, insofar as one day they will upgrade the stock). It is in my top 5, but I cannot buy them all.
    Jul 1, 2013. 04:44 PM | 1 Like Like |Link to Comment
  • Finally, A Reason To Buy Gold Miners [View article]

    It appears that AEM and AGI probably calculate the "all-in" costs differently, probably to enhance the comparison. I think that is the point of the WGC standardization.

    I should mention that Zacks a few days ago downgraded AEM to a sell, citing high operating expenses, which are not usually included in the "cash costs." The release:

    According to the YAHOO stats, the debt of AEM is decidedly a higher percentage of market cap and is about 2.75 times the cash assets. This is relatively high in comparison to AGI, AUY and GG. It may acceptable, but debt load is a problem for miners that are barely making money at low gold costs...they do not have the same options of adjusting production like a no-debt producer like AGI.

    Hope that helps,
    Jul 1, 2013. 02:43 PM | 1 Like Like |Link to Comment
  • Finally, A Reason To Buy Gold Miners [View article]

    Good observation.

    Many have gotten burned trying to guess the gold bottom. To limit the downside risk, I decided to look at cheap out-of-the-money mid-term options in gold miners when the spot price hit our $1240 level. I bought AUY and GG options, but Alamos does not have any options available.

    Hope that helps,

    Jun 29, 2013. 04:59 PM | 1 Like Like |Link to Comment