After watching very good earnings reported for 3Qtr, did anyone else see the downgrade by FBR as somewhat questionable? FBR was one of two underwriters for this stock in the IPO. I don't know whether they sold all their allotted shares or not. So, on a down day in the DOW on a Friday afternoon, they issued an "underperform" rating, not a one step drop from buy to neutral, but to underperform. I can see a drop in rating based upon reaching their price target, but to underperform. That is questionable. Then, the stock volume increases to six times the normal volume. Something had been prepared in advance. FBR doesn't have that kind of clout to stimulate a large market response. They certainly don't have a strong reliability factor either based upon their own in-house problems. Look at their stock price. It is cheaper than MPW. I would be interested in any comments on this subject.
Over the years, in lots of stocks, I've seen the same feelings expressed after a large drop in price. The sameness is always intruiging and it points to the fact that people react to emotional stimulation in nearly identical ways. Simply put, all of us being human, our reactions are the same.
Best thing to do is remember investing is an intellctual persuit best served by detached, unemotional consideration. As a holder of MPW for some time, I've been pleased to watch it rise in nearly linear fashion for months and months - but I never added to my position during the run up in price because I am a chicken. I can't afford to gamble, so I wait for quality merchandise to go on sale.
On the way up, you feel real smart as the apparent steady rise validates your long position. On the way down, doubt creeps into your thinking as that validation seems to fade. But in reality neither emotion is a sound basis for investment. I like MPW because the sector is growing, the management is good, and smart men whose opinions I value think it's a good long term investment. Additionally, in terms of where we are in the economic cycle, I prefer cash payouts in place of high growth potential. The risk factors I'm aware of are short operating history, concentration of tenant base.
The earnings report included the following statement, which wasn't altogether warm and fuzzy, but part of the normal operational ups and downs running any business:
*** As the Company has previously disclosed, the original tenant of the Company's West Houston Town & Country Hospital and Medical Office Building has faced financial challenges primarily due to the absence of key managed care contracts. Subsequent to the end of the third quarter, MPT terminated the lease with the original tenant and replaced it with a recently organized partnership. The partnership has entered into an interim management arrangement with an experienced third party healthcare management firm to operate the facilities. During this interim period, the partnership tenant will be owned and controlled by one of MPT's most successful hospital operators, Vibra Healthcare.
"At this time we are actively negotiating with several large hospital systems that are interested in leasing our facility under terms and conditions that we believe are generally preferable to those of the previous lease," said Aldag. "All of these systems are well capitalized and have the necessary managed care contacts already in place. In each of our tenant relationships, we negotiate protective covenants in our leases and liquid credit enhancements that are designed to allow us to move quickly to replace a poorly performing tenant and otherwise act to protect our investment and earnings stream. Because of our careful underwriting and pre-planning concerning the Town & Country tenant, we believe that we will be able to conclude these negotiations quickly and without material adverse financial consequences." The Company stated that there is no assurance of a successful release of the facilities. ***
So basically they had a poorly performing tenant whom they terminated, and are in process of establishing new higher quality tenant possibilities. At least this is how I read it. I'm willing to wait and trust that management can do what they said, and fairly quickly.
I think you are right about FBR but you got keep in mind the shorts have been holding this stock for some time they want out, they will do anything to make it drop.but the drop was back to about a month ago price, more tricks are coming if you let them scare you into selling