I am glad you like my line - and I happily admit that I was certainly not the first person ever writing it.
You might have however noticed that I used the reminder of my post to explain that given the uncertainty of the future this always can be just a guess based on various working assumptions which may or may not come true. Means - past financials might be interesting if you want to know whether your company works prudently, but just extrapolating past numbers into a different and unknown future is unlikely to give you any sensible information.
Not quite sure I managed to follow this through ... but I recon the answer (if you want one) is as always: "It depends".
If I am sure this 2.2 million dollar investment vehicle can be liquidated and will return 2.2 m dollar, than - of course I would pay $490k for it.
But hey - there are all these risk and uncertainties, so without due diligence I can't answer your question.
I assume that you are currently talking about the market value of OCA (and - btw - all other REITS), which is lower than their respective NTA, aren't you?
Well, so I guess the market currently thinks that's what the company is worth. However one thing is certain a) the market can't think and b) the market changes its views frequently (with or without changing circumstances). Actually - I made my best deals when I disagreed with the market, and the market changed afterwards its position. Do you really think it is meaningful what the market assigns at a certain point as market value to a company - other than determining your current BUY or SELL price?
As well - did it ever occur to you that the market is influenced by so many other parameters rather just a very narrow view on a specific backward looking accounting model?
At the moment all REITS are in the cellar because they are negatively correlated to interest rates. No accounting acrobatic necessary - a blind man (or woman
) can see this with his/her walking stick.
At the moment all NZ shares are (relatively) down, because the world is shivering and many big funds moved from "uncertain" currencies (like the NZ$) to the safe harbour reserve currencies (like USD, EURO). They sold our REITS in droves without any thought about OCA's or any other REITS cash flow.
Any attempt to explain this behaviour with the cash flow of some local company is - with all respect to some of the posters - plain nonsense.
But here is good news: REITS are inversely correlated with interest rates ... and given that most analysts (I know, they can't predict the future either) assume that we are close to peak interest rate, now is a great time to buy REITS.
Ah yes - and big international funds will move back into NZD (as long as our government doesn't totally screw up, which admittedly is a risk) and other exotic currencies as soon as the international troubles ease. I don't know, when this will happen, but I do know that at some stage it will.
Which means - well managed REITS are currently available at bargain prices. I think OCA is a well managed REIT (though admittedly, with some warts - their reporting and paying unimputed dividends). Always a good idea to buy good companies at bargain prices, and hey - there are not many companies around who don't have any wee issues, don't they?
Reply With Quote
Originally Posted by BlackPeter
;
Bookmarks