Retirement village operators

[couta1]

You should try and understand them mate. Its how you measure relative value between shares.

I do understand them but I dont think you quite got my post, you must be pegged out after Christmas.

[Beagle]

I like crunching the numbers properly.

[winner69]

Lol mate you get too hung up on all these ratios.

Hey Couts - we’re going to get bamboozled when beagle goes beyond ratios and starts applying ‘ probabilities’ to things happening and coming up with ‘expected returns’

An accountonomist way what you were saying earlier - need to filter out the irrational noise at both ends of the spectrum, and find the truth more often than not lies in the middle.

[couta1]

Hey Couts - we’re going to get bamboozled when beagle goes beyond ratios and starts applying ‘ probabilities’ to things happening and coming up with ‘expected returns’

An accountonomist way what you were saying earlier - need to filter out the irrational noise at both ends of the spectrum, and find the truth more often than not lies in the middle.

I've been doing a lot of refresher study of the known universe lately but I reckon Beagle is more of an expanding universe kinda dog so once he's sussed out how fast the universe is expanding he's going to apply the same rate to the probability of the SUM share price trajectory.

[winner69]

I've been doing a lot of refresher study of the known universe lately but I reckon Beagle is more of an expanding universe kinda dog so once he's sussed out how fast the universe is expanding he's going to apply the same rate to the probability of the SUM share price trajectory.

That Edwin Hubble was a pretty clever guy ....Not like that guy Ben Graham who made up a formula based on what he Felt was right and then declared it was a load of the proverbial anyway.

I beginning to worry about Beagle - if he does suss how fast the universe is expanding he might ask is the universe infinite ...and then conclude that the SUM share price could go to infinity.

[Beagle]

While you guys are trying to figure out the mysteries of the universe, maybe its time to consider this
“The most powerful force in the universe is compound interest” – Albert Einstein
http://www.datagenetics.com/blog/april22014/index.html

SUM closed today at 6.59 times its IPO price from 8 years ago. No way it could triple from here in the next 3-4 years...or is there...
In that 8 years the PE has basically halved so none of that gain is off PE expansion, quite the contrary. Compound high growth is an incredible thing, Albert Einstein is absolutely right.

[Cadalac123]

I feel like some of these SP gains are clearly FOMO? people thinking they are missing out on these amazing retirement stocks.. bubble

[Snoopy]

I feel like some of these SP gains are clearly FOMO? people thinking they are missing out on these amazing retirement stocks.. bubble

I tend to agree with your sentiment Cadalac. Mind you, I am a disinterested party. I have never invested in the retirement sector. This isn't because I don't want to invest in it. It is because I haven't seen the value that would make such an investment worthwhile, in my view (in hindsight a wrong call, albeit I would still argue not a foolish one).

Ryman has been on my 'outer radar' for close to twenty years. It has always looked expensive to me. And from a distance my perception of an excessive price was driven by the excesses of the property market creating a future 'property bank' of capital appreciation on Ryman's owned units come occupation right resale time.

I have been looking more closely at Ryman's and others over the last 18 months with the 'Auckland Property Slump'. But really all that happened was that property prices reduced from 'Insane and Certifiable Levels' to 'Unattainably Expensive'. I don't call that a correction. And now apparently prices are on the rise again. I think the NZ property market is at unsustainable levels and is being pumped up by the lowest interest rates in living memory and the high price of building new. One of the pumping factors, allowing multimillionaire overseas owners to come in pump up prices has been turned off. But ultimately if those living and working in New Zealand on NZ wages can't afford to pay more for their homes, then property prices cannot rise. Yes I know that immigration is still high. But so is the governmental resolve to solve the property crisis.

The very factor that has caused the boom in retirement village operators could easily go into reverse. Instead of having a property bank of realisable gains on unit sales, you could end up with a property bank of embedded losses leading to crushing write downs just as cash costs due to cuts in government funding for care beds go higher. I went to a retirement village Christmas function last week where the manager said that the only way they could keep up their villages care beds to a high standard was to subsidize that side of the business from occupation right resales out in the occupy your own villa section of the village. I think if the property market does slow down for ten years many villages operating today will be in serious trouble.

SNOOPY

discl: Not an investor in the retirement sector, and it has now moved off my watch list.

[couta1]

I tend to agree with your sentiment Cadalac. Mind you, I am a disinterested party. I have never invested in the retirement sector. This isn't because I don't want to invest in it. It is because I haven't seen the value that would make such an investment worthwhile, in my view.

Ryman has been on my 'outer radar' for close to twenty years. It has always looked expensive to me. And from a distance my perception of an excessive price was driven by the excesses of the property market creating a future 'property bank' of capital appreciation on Ryman's owned units come occupation right resale time.

I have been looking more closely over the last 18 months with the 'Auckland Property Slump'. But really all that happened was that property prices reduced from 'Insane and Certifiable Levels' to 'Unattainably Expensive'. I don't call that a correction.

Stocks like RYM/FPH/MFT always look expensive yet they keep increasing in price, I remember holding FPH for a while when it was $3 only about 6 yrs ago, some investors have the nous and ability to just buy these stocks and sit on them for a long period of time making huge gains for themselves and kudos to them, I intend to do the same with my PAZ holding but I'm more of a trader nowadays so are unlikely to have many stocks which are true long term holds excepting HLG which is my long term income hold.

[Snoopy]

Stocks like RYM/FPH/MFT always look expensive yet they keep increasing in price, I remember holding FPH for a while when it was $3 only about 6 yrs ago, some investors have the nous and ability to just buy these stocks and sit on them for a long period of time making huge gains for themselves and kudos to them.

How much is 'nous' and how much is 'luck' though? I would like to think that I invest with 'nous', yet I know a large portion of the return game is 'luck' - like when an entire sector is rerated from historical norms. That is something really difficult to predict. If you don't have a model to calculate how much Ryman is really worth, is it 'nous' to hold onto your Ryman shares just because they have done you well in the past?

But retirement villages relying on property appreciation: that is easy to predict up to a point. Perhaps if I was living in Auckland over the last twenty years I would have understand the property market in that city better and had the 'nous' to invest in Ryman's 15 years ago. But I didn't live there and don't live there. I guess I am recycling the old line that short term the market is a voting machine but long term it is a weighing machine. At some point there has to be something behind the scenes happening to justify that share price squiggly line going up.

The only thing I can see that is pushing retirement shares higher is historical trends which if they haven't changed already must go into reverse in the very near future. You can't build a business case on the hope of property values increasing from already exorbitant to irrational levels. That is my view. Mind you that was also my view 15 years ago. But the higher property prices go eventually I will be proved right - even if 'eventually' turns out to be after I am dead!

SNOOPY