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StoneMor Grossly Overvalued - Dividends Unsustainable

|Includes: StoneMor Partners L.P. (STON)

Eagle Heights Capital, LLC believes that StoneMor Partners L.P. (“StoneMor”) has systematically inflated its non-GAAP unaudited “adjusted operating cash flow” well beyond its audited GAAP operating cash flow.  StoneMor has coerced retail investors into buying a dividend-yielding stock backed by illusory cash flows as key insiders have sold.

Evidence of malfeasance alarms us.

 (1)  Company-issued press releases contradictory to 10-K and 10-Q filings

(2)  Opaque and misleading unaudited non-GAAP accounting

(3)  Dividend increases in spite of negative EBITDA and cash flow trends

(4)  Perverse incentive distribution rights for the General Partnership

(5)  Litigious history of McCown De Leeuw, owner of the General Partnership

(6)  Egregiously high audit fees relative to industry peers

(7)  Founding partners’ recent sale of significant holdings

(8)  Potential conflict of interest with investment banks hired to sell stock


Please refer to our 67-page presentation entitled “StoneMor Partners L.P., Questionable Accounting and Valuation”.

We phoned investor relations on multiple occasions with no response and intended to publicly share our concerns with management on the 3/16/11 conference call.

Arif Shaikh

Disclosure: I am short STON.