Good timing. I think the risk return is extremely good buying in today. Unfortunately, I own too much as it is and cant add, even at these giveaway prices.
The senior living space has never burned me in the past. Sunrise and Emeritus were big wins and FVE looked like the next to pop as all metrics (P/B,P/S, minimal debt, etc) pointed toward this was the one in the sector that had clearly been left out. I realized the related party stuff, but I also had success with Travel America (TA), which had the same sort of set up.
This still will likely come back, it is a mater of when? Investors' memories can be short lived when you start showing a quarter or two of good results. The same shareholder frustrations existed back when TA was in the $4s and all the talk about the phony setup to enrich Portnoy and other related parties, but in a year or so it is at $12. If I were Portnoy and Company I wouldnt want this looking too bad to the point it really garners trouble for myself.
Nonetheless, this is a huge opportunity cost to have funds tied in FVE for a year or two. But quit honestly, with markets at all time highs and valuations stretched, I dont have many good stock ideas that are a whole lot better than just sitting on FVE.
With the market at new highs, this looked increasingly cheap and I definitely made the mistake of buying too much as it continued to drop. Learned two lessons the hard way. Don't buy companies with horrible corporate governance practices and don't continue to buy on the way down, no matter how cheap something looks.
Good call on shorting this, but come on $1-$2? Giving them a market cap of like $50M? Remember a 100 unit or so senior living community they just bought was for $20M. They own (not lease) about 3,000 units. at $1 or $2, they might as well buy back their own stock rather than go buy other senior living communities.
Running out of cash? Hope you aren't implying they have liquidity issues. Remember, they are going out and acquiring businesses and doing capex renovations, which arent required. So let's not make it sound like they are in a cash crunch.
We all agree FVE has great assets worth several hundred million $ and they generate over $1.3 billion in revenues. All shareholders are teed as hell, but what can we do about it????? Nothing, exactly! FVE is in the firmest grip of the related parties and mgmt can screw up as much as they like, financials can take forever to get released, but as long as the related parties' interests are served, FVE's stock price doesnt matter. So what are helpless shareholders to do in a situation like this? Get out, move on and take this as a lesson learned about investing in companies with poor corporate governance practices or just sit it out and hope Portnoy and gang throw you a bone once in a while to shut you up.
Twice the average volume already and down 6-7%. I thought people would have been relieved that they finally got financials out. Q4 results werent good, but we know metrics have trended a lot better in 2014. So what was so disturbing that is causing all the selling today? Honestly, Im relieved financials are out and I know recent metrics are doing well and continue to improve qtr over qtr. The silence was the worst possible situation in my opinion.
I agree, not much to look forward to short term. Shareholders can either sit tight, continue to give mgmt and Board and earful, and wait it out for a few quarters and hopefully operating metrics improve and new shareholders get attracted or simply bail and take the tax loss, if you are like me and bought at higher levels.
As you pointed out, an area of positive is that we at least know occupancy rates are 70 basis points higher than Q4 2013 and average pricing rates are up about 2%, in line with their goal of 2-3% annual increase. So you have the two key metrics moving in the right direction. Those who decide to stay in FVE should just remove it from your ticker list and start tracking it again in 2015.
Why even have this as a publicly traded company? If the company wants to engage in self dealings to enrich themselves and just blow off shareholders, why not just take it private at this dirt cheap valuation? They'd save millions on audit fees from being a publicly traded company, administrative salaries, and save effort from answering to irate shareholders. Further, there wouldnt be a flashlight on all their self dealings and boneheaded moves. Im sure management and the conflicted Board dont like all this heat from shareholders. So why bother with all the headache? Offer a small premium to today's share price and still get the company for less than the value of the real estate alone. It could also boost employee morale. Who wants to see their company stock continue to crash, that cant be positive.
Pretty heavy selling here after the 8K was released on providing financials to banks by Friday for the revolver they have. Absolutely, it is frustrating the lack of transparency and communications, but it isn't like FVE has drawn down much on the revolver. From the latest audited financials, it looks like they have $10M drawn, and they probably don't even need it as they have enough cash on hand to easily pay it off. So has anything materially changed that increases the risk of holding FVE stock?
It's frustrating that there is no accountability among mgmt and the Board and I am definitely not happy with the lack of shareholder friendliness of this company.
Yes, it has been painful being a shareholder of FVE. But at the end of the day, it comes down to risk reward. Yes the company has issues of related party, but so does company's like Travel America (TA), where I believe the Portnoys are involved, and that is trading close to its 52 week high. Like FVE, shareholders are increasing the scrutiny on related party dealings and the market has factored in a huge discount compared to peers for the related party structure.
At the end of the day, the company is trading at a fraction of its property/liquidation value, profitable, has very little debt, is in a growth industry, and virtually has no chance of bankruptcy. So like TA, it will probably always trade at a discount to peers, but it is very possible FVE can trade back towards their 52 week high when they get these reporting issues out of the way. So risk reward looks pretty compelling here to me.
Looks like investors are just throwing in the towel and taking a tax loss here as mgmt is taking forever to get their act together. I bought everything I could as the stock has been falling and today's buy is my final tranche as Im maxed out on my shares of FVE.
With the market at new highs and valuations stretched, I don't see a lot of downside risk to FVE at these levels. The biggest impediment is the lack of communications, primarily due to the financial reporting issues.
I think the risk reward ratio here is very favorable and I have taken profits on stocks that are at all time highs and plowed it into FVE. Once they get their reporting straightened out and communicate the progress they've made throughout this year, I think the stock will see a pickup in interest. FVE has a lot of great assets and is in a great industry but they aren't given the value because of all the governance conflicts. Shareholders need to continue to put pressure on the Board and Management. If these issues get resolved, arguably FVE could more than double from these levels. And if they dont, FVE chugs along in the $4-$5 range as the company is in great financial shape and has virtually no chance of going under.
Unfortunately, I own FVE, but fortunately I did own SRZ, ESC and SKH. Months leading up to the deal, they all took big hits. SRZ had CEO insider selling news, which tanked the stock while mgmt were granted a ton of options at low strike prices. ESC mgmt was lackluster in their tone months before the deal and ESC was trading near 52 week lows when the deal was announced. SKH missed, and missed badly they last couple of quarters, while the CEO was granted a ton of shares when the stock was trading in the 4s.
Could it be FVE mgmt is also letting the stock capitulate while they accumulate stock or options at a low price before something transformative happens??? I'd have a lot of hope if there were so many related party issues with this company. Tons of potential here, but also extremely messy from a governance perspective, limiting the options to realize value for shareholders. Regardless though, FVE management and the Portnoys should be in the hot seat for being the worst publicly traded company in the senior living/skilled nursing space.
This space has been on fire. You look at the whole sector, and literally only FVE is the lone stock that is trading at a fraction of book value. Shareholders need to step up pressure on management. Write them, call them and raise hell,. this is unacceptable. They should take FVE private if these cronies are just engaging in self dealing beneficial deals at the expense of shareholders.
Agree, CFO definitely has to go too. I write emails to investor relations complaining all the time about how there is lack of accountability and asking how management gets to keep their jobs with such poor performance.
I agree, all shareholders should continue shining a flashlight on management, voicing opinions, and demanding results. If mgmt and all the related parties don't continue to want an earful from shareholders, maybe they should just take FVE private and do whatever they want to it. I encourage all shareholders to raise hell with management. We have hard earned capital invested in FVE and rightfully deserve a reasonable rate of return.
FVE needs a much better corporate governance and management incentive plan. The CEO holds just $2million worth in FVE stock while his annual salary is $1M. Given his poor performance, Im suprised he is still the CEO, but of course we all know he is Portnoy's puppet to serve the Portnoy interests. I'd like to see his salary reduced by half and given stock options instead. Clearly, the immaterial management ownership of FVE stock doesnt help street perception of FVE's governance and incentive structure.
From a shareholder perspective, FVE is a horrible investment. They did a big equity raise (sold in the $5s) a few years ago supposedly to expand the business. Now fast forward a few years, earnings have shrunk, mgmt cant even report on the #s, stock is trading lower than it was years ago, although the broader market has taken off, there is no dividend, all while all its competitors are seeing their stock reach new highs. FVE is probably the only company in the space that destroyed value for shareholders in the past couple of years. I could run this company better than Bruce. How is he still the CEO??? Yes, the Portnoy's have a lot of influence, but there must be something shareholders can do to oust Bruce.
dead money until there is more transparency. The company ultimately needs to decide what is the objective of FVE. Is it to be run as a non-profit for the benefit of certain related party shareholders or to maximize value for all shareholders?
Potential is definitely in this stock. The industry is booming, FVE trades at a fraction of tangible value, and the stock is trading below the equity offering price of in the $5s a few years ago so mgmt credibility is on the line. Unless managments goals are to further the interest of the related parties, the stock can quickly spring back to life by taking actions to assure shareholders that the company is operating to maximize shareholder value.