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Originally Posted by
Roger
To digress slightly from the moat discussion one of the key attractions, in my opinion with Ryman, is its ability to grow consistently as has been demonstrated in the past and almost without doubt into the future.
Well I think its very much part of the discussion Roger! Indeed it is your conviction of the existence of a MOAT, and your assessment of whether it is getting wider or narrower, that allows you to come to the conclusion that their returns are sustainable for a long time into the future.
Of course the first decade of their listed life was an absolute doozy with compounding returns in the mid 20's not even including divis. Of course they were coming off a low base, and had more favorable tail winds - but you simply don't need to hit those returns to do ridiculously well over time.
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Management are on record as targeting a 15% growth rate for the forseeable future which I think taking into account the higher demand for advanced care in rest home and dementia with a rapidly aging population should be realistically achievable over the long term.
Yes, some years they will do more and some years they will do less. Eventually growth rate will slow down (the bigger they get the harder it will be to maintain), but that is far enough away that it is not relevant to investors at this point in time.
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Take a theoretical example, an investor approaching 50 thinks Ryman's facilities are first class and wants to retire at one of their fine establishments when he's 65.
I realise its theoretical, but I believe RYM target 80+ which is better for investors, as the turnover is higher. It sounds cold to put it like this, but in my experience people are often not ready for this step until about this age anyway - so its a win win. If people came into the villages at 65 they could have a 20 - 25 year tenure rather than a 5-7 year one, which would be no good for RYMs stockholders.
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Here's how the Ryman compounding machine appears to loo to me, $100,000 invested in Ryman now compunded at 15% growth per annum over 15 years = $813,000.
Yes! But you are forgetting one important factor, and that's dividends. During that time they will also have paid you $130,370 less tax in dividends. And at that time you will be getting about 22,000 - tax a year (and still growing) from your corporate coupon :)
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P.S. Looking forward to tomorrow.
Me too. Not that the short term result makes much difference, but its one of the few times a year you get to really chew over the progress and comments.