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Short sellers have a bad rep these days. Well, they always have, but it seems to have reached a fever pitch in recent years.
Shorting is a hard way to make money: losses are infinite while profit is
Medical Properties Trust: A Disaster Investors Should Have Seen Coming
Summary
- At $17 in July 2022, MPW was a clear sell. At $6.36 today, it represents a high-risk, high-reward opportunity. Yet investors are more negative on it now than then.
- 2022 MPW investors did themselves a disservice by ignoring significant red flags around disclosure, debt levels, and comparable companies.
- P/FFO may seem like a bargain at a little over 4x, but FFO will be pressured significantly moving forward.
- The 2027 Bonds are yielding nearly 13%, showing a significant level of stress. These bonds have actually traded down after the dividend cut, which is normally a positive for them.
- Great investors focus more energy on finding disconfirming evidence for investment positions as to avoid losses. We should thank short sellers who provide it.
Individual investor and family office principal with over 20 years of investment experience. I favor fundamental analysis and look for individual issues and asset classes that are out of favor and represent a good risk/reward trade off. I often employ options strategies, covered calls on companies I own that have gotten ahead of themselves, and writing puts on stocks that I'd like to own at lower prices.Educational background Finance MBA (NYU Stern) with Computer Science undergraduate.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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