Dane Bowler
Value, hedge fund analyst, REITs, long/short equity

Omega Healthcare: Quality At A Discount

The buy thesis

Omega Healthcare (NYSE:OHI) has been traded with the rest of the healthcare sector, completely independent of its fundamentals as an individual company. After years of consistent FFO/share growth and dividend growth, its intrinsic value now greatly exceeds that implied by its market price. It is trading at only 10.7X projected 2016 FFO; a multiple which does not make sense for a strong, conservatively levered and growing company. Before we get into a fundamental demonstration of its mispricing, I would like to spend a fair bit of time going over how such mispricing came about.

Origin of mispricing

There are plenty of excellent companies to invest in, but most are only available at the expensive pricing...

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