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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • One If By Land Two If By Sea(NMM & SNH) 0 comments
    Jun 20, 2013 2:28 AM | about stocks: SNH, NMM

    To briefly sum up this surf and turf play. Investing in 1 for 1 per se; NMM and SNH, yields one with an interesting amount of qualitative diversification, and some perhaps somewhat welcome quantitative(metric based) diversification aswell.

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    NMM as discussed in a previous post; is a somewhat well known shipping company. It earns its dividends off of the profits that it earns above a baseline rate for leases based on a per day basis. It has a healthy fleet of ships/boats as can be seen from its website(http://www.navios-mlp.com/Fleet/default.asp). There is a threshold involved in its profit distributions but surely these are kind of specific/arcane and may not be interesting/pertinent to this play in general. Maybe they are, however, I'm not sure if going to into that is really necessary per se. They can however be seen on the above link provided.

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    SNH is as grounded as one can get. They also own an impressive armada per se, however, they own retirement related communities/apartment buildings. If one goes to their website; (http://www.snhreit.com/locations/view.aspx) one can get a better look at this; but most of them are located in the mid Atlantic region/ "old" USA per se; with a smattering going westward. They also have quite a presence in semi-old "Jacksonian" America namely the Appalachian region per se; namely Tennessee, Kentucky, the second areas of America to be colonized.

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    Why is this grassfed beef and mahi mahi a tempting addition to one's buffet of capital allocation; well one could look at this from several perspectives. If one is unsure of future global trade/shipping demand; then one may be concerned by the future of NMM. However, at the same time, everyone likes high-yielding stocks per se(presumably).

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    Hence to balance out these concerns without picking up a sextant, one may simply go dollar for dollar with an investment into the brick and mortar assets of SNH.

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    Demographics don't change as quickly as global demand. With the reality behind China's economic data always being some-what of a kaleidoscope of fact and fiction, future global trade patterns are always a big question mark. With much of the world's youth un/underemployed, future demand is always shaky, and the thought of import and export, on that common-man level(non-industrial demand) is somewhat unsure.

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    However, perhaps one can hedge the high-yielders of global trade, with the steadfastness of old age. With SNH's reliance at least in emphasis per se, on those who happen to have the most assets in developed countries at the moment; namely those of "senior" status per se(age wise); it may be wise to hedge the unsureness concerning consumer demand with that which is sure to be demanded; and which can in turn hopefully/presumably be afforded, namely senior living.

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    When one does go 1 for 1 with this investment one ends up with a hybrid investment with a beta or around 1.1; and a yield around 9-9.5%. It's arguably not too shabby for the diversification involved; and perhaps even if one is drawn out by the sirens of the sea(high yielding NMM), its always wise to keep one foot on solid ground(NYSE:SNH) to make sure that one doesn't end up cursing one's investment decisions like a sailor; and seeing one's capital vanish like the Flying Dutchman.

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