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Chinese Conglomerate Overreaches, Park Hotels Benefits


  • We sold our Park Hotels a month ago, just before the deluge.
  • Our timing was lucky or brilliant; I’m going with lucky.
  • It is time to re-establish the position.

We sold our Park Hotels (NYSE:PK) the morning of February 5, as well as a very large chunk of the rest of our holdings. (A record of all trades is always visible to subscribers at our SA Marketplace Investor’s Edge® site.)

We sold at 27.83. As of Friday, PK sold as low as 24.23. Why?

A big Chinese conglomerate, the HNA Group, was a 25% shareholder of Park Hotels. Good thing. HNA way over-extended itself and got into big trouble. It announced as part of getting out of the hole they had dug themselves into they were going to sell all 53 million of their PK shares.

HNA is a big company, one of the Fortune Global 200. But even big companies can stumble no matter what Jonathan Hart said. (In one “Hart to Hart” episode, he opined that “the first $5 million is difficult, after that it is inevitable.”) But according to Bloomberg, HNA has of late been conducting a fire sale of properties in order to keep some of its other businesses afloat. They have sold $9 billion worth of assets. That’s the entire value of Park Hotels!

A screenshot of a cell phone Description generated with very high confidence

My full discussion of why I like Park so much was contained in one of three articles I wrote about the global hotel and lodging industry. That one was titled “Can Hotel Companies Survive Airbnb? This One Will.” You can see it here.

That article was filled with pretty photos of some of Park’s most beautiful hotels. It gave me a chance to reminisce a bit about some of my stays at these premier properties (funded for the most part by the loyalty points I accrued by staying at Park’s less upscale Hamptons, Hilton Garden Inns, and Doubletrees!)

You see, Park today is comprised of 55 former Hilton Worldwide (

I have argued in many venues against passive index investing. My clients don't pay for passive. That is why our trailing stops got us out in the first couple days of February. We are now re-entering slowly and with new trailing stops. If you would like to see the results of an active model portfolio, we currently offer a free trial. One-time browsers welcome, subscribers welcomed with open arms!

This article was written by

Joseph L. Shaefer profile picture
Joseph L. Shaefer is a geopolitical analyst, as well a retired professor and Brigadier General in Special Ops and Intelligence - he draws on all of these experiences to inform and share his investing ideas. Joseph is the leader of the investing group The Investor's Edge. Where his process begins with reviews of each of the 11 Sectors that comprise the S&P 500 to find the best investments across all sectors for a balance between growth and steady income. Features include: a growth & value portfolio, 23 years of research, and access to Joseph and his community in chat. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PK over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

Joseph L. Shaefer profile picture
March 2018 marks the 9th inning (9th year too) for this bull market -- the 2nd longest in history. Having seem many more of these cycles than younger folk I understand it may be confusing to some that I am willing to sell even the shares I like best. The market has gone from pessimism to skepticism to optimism and now to euphoria, the time when anyone can make money on anything -- until they don't. When the music stops our trailing stops execute -- no muss, no fuss, no emotion. We are already moving defensively into non-market-sensitive alternatives. (See my recent articles on IOFAX and inverse Treasury ETFs.)
We buy the best, but we won't be caught holding the bag when even the best plunge. Love the company, never love the stock. We'll place a trailing stop on this purchase as well.
WhitecollarThugs profile picture
Hello Joe,
I share your concern for the invincibility mindset that has taken hold. Reminds me of 2000-02 and 2007-08.
Obviously real correction(s) will take place, and also obvious is no one knows when. I concur w/ you, the euphoria following closely on the perturbations in February tells me that people are buying on emotionalism, not fundamental value connected to the actual growth of the US economy.
It's also impossible to know what eventual correction(s) will look like -- A nice gradual bleed-down, or a series of stepwise dips, sharp plunges, etc.

In 2007-08 after the first 15-20% down I thought it was too late to sell, and that it would head back up at any moment. Good stocks were crushed, then become "dead money" while they took years to retrace lost ground. Entering some new positions in Jan-May 2009 helped, but still ....

This time it will be different. Since fall have been moving toward a more defensive posture. ~7% cash, and large positions in high quality utility stocks, preferreds, and other div payers that should generate income in a downturn.

Thanks to your recommendation AlphaCentric IOFIX/IOFAX makes up ~4% of the total. Good call. Still have homework to do on "inverse Treasury ETFs", so nothing there yet.
Joseph L. Shaefer profile picture
Thank you for your thoughts, Whitecollar! The problem with long bull markets is that they are too often accompanied by short investor memories. Both bears you refer to were equal in their brutality to the euphoria which preceded them.
I will continue to buy long to some degree to pick up what we can from a bull this old but the Foundation of our portfolio will no longer be market-sensitive funds and ETFs. It is now precisely those you mention above. We'll take the income and let others take the risks.
papaone profile picture
JS, I'm 80 years old, followed our economy and invested in the market for years. However, I did sell out early 2008 and reentered 12/08. So I am many miles ahead. That said, I see what we always hoped for, a government that now has open the door to Capitalism at it's best, and off we go. This will last, maybe not forever, but until the government again screws it up, not likely in the next three years. Obviously, if the Socialist get control were are doomed.
long positions: BGH, GSBD, GAIN, PFLT, MPW, ARCC, NRZ (100k SHARES), LADR, ABR. and deciding on 1k shares of pk.
You sold pk @ $27.83, and now you want to buy it back? I don't understand why you rush to sell. pk's price to book ratio is 1 and it is making money. It only pays out 65% of the profit. You are not losing money by holding it. In addition, you are getting about 7% dividend.
Joseph L. Shaefer profile picture

As Investors Edge subscribers saw in our chat section, I bought 300 share of Park Hotels for our Growth and Value Portfolio (up from $250,000 to $1.,25 million in 20 years and 2 months) today at 26.60. Darn! I "could" have had it at the low of 26.53 if only I had waited. ;>)))

Like fellow Contributor Actionable Conclusion, I look forward to buying more on any pullback...
Wife and I picked up 200 shares on the recent dip, up 9.1% as of today, with an 8.1% dividend as well. When I go on the PK website and see their properties it makes me drool; if PK was in the meat business they'd be USDA Grade Prime.
Joseph L. Shaefer profile picture
Hi Whitecollar!

I keep a number of fine companies on page 1 of my watch list. PK is always there!
WhitecollarThugs profile picture
Intriguing article, Mr Shaefer. Thanks for that.

Obviously my 20/20 hindsight radar says it would have been great to hit it two and a half bucks ago -- but honestly it was not even on my watch list. It is now.
Thanks again, and enjoyable read. V/R
EarningsMarq profile picture
It’s a solid longer term company
Joseph L. Shaefer profile picture
No matter how many shares I ultimately buy, I agree.

When PK is at 35, 40, wherever, and I have been getting 6.4% + every year on a knockout REIT I'm pretty sure I won't be kicking myself for paying 26.55 instead of 24.
The time to buy was when it fell below 24 just a few days ago.
Joseph L. Shaefer profile picture
The time to buy a great company was the absolute low thus far this year. Or today. Or, maybe, tomorrow. My crystal ball is cloudy so I buy quality and buy more as it makes sense to do so!
Actionable Conclusion profile picture

"The time to buy was when it fell below 24 just a few days ago."

Mike, interestingly enough, both Professor Hindsight, and Captain Obvious agree with you. Who could argue?
Ben Gee profile picture
My best return was when I bought too early and sold too early.
My worse loses were when I bought too late and sold too late.
Share price is now higher than before the HNA announcement. Would you not say that the opportunity has passed?
Joseph L. Shaefer profile picture
I'm buying only 1/3 now. If the market for PK roars ahead I'm quite happy to own a small piece of a great company with a 6.4% div (most likely growing every year.)
If I can buy more I'll be even happier.
Just a happy investor I guess!
Actionable Conclusion profile picture
Hi JS,

I read that article you wrote on PK. I made my first foray into PK a few days ago at $24.82. I hope it crashes. If so I will buy with both fists.

APLE too, hope that falls hard so I can get a slice.

Keep up the good work JS.
Ben Gee profile picture
Chinese want to get into real asset for their money.
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