OCA - Oceania Group - retirement villages

[winner69]

What is the price you pay for that float? And are Ryman likely to grow at a faster rate than Oceania in the future?

Of course ……..

[Valuegrowth]

As a holder, 100% OCA should suspend dividends. Possibly should have for the last year or two and likely for another year or two. Use it to pay down debt or expansion as appropriate. Much more effective and better for long term prospects of the company.

I couldn't agree more.

[Valuegrowth]

Hi, I wrote about this in my latest Substack, Just the Business. Arie Dekker at Jarden thinks Oceania needs to address its dividend problem. Also at the other retirement village stocks. It's still free to read here: https://justthebusinessjennyruth.sub...ia-devaluation

Thank you so much for the information.

[ValueNZ]

Time to start thinking clearly.

Interesting way of framing it haha.

When you say OCA's situation is better, are you referring to the fact that the size of the float in relationship to equity is larger in OCA than Berkshire? Or something else?

[Curly]

How long will it take for people to click on that you can buy an asset for less than half it’s value. Very few rushing in for the Christmas sale. Need the Briscoe lady to do a OCA sale pitch. Topped up again 🥴

[SailorRob]

How long will it take for people to click on that you can buy an asset for less than half it’s value. Very few rushing in for the Christmas sale. Need the Briscoe lady to do a OCA sale pitch. Topped up again 若

Around a quarter of its tangible asset value and less of its intrinsic.

[Mrbuyit]

^^ I guess the question for some of us longer term holders is when do we see a re-rate closer to "value".. sure it's a bargain but maybe it remains a bargain for 10+ years, like SR is hoping for.. It depends if you are in accumulation mode or have enough...(maybe you can never have enough)

It seems like the sentiment suggests you could pop the cash elsewhere for 12 months or more without really missing out..

[SailorRob]

Trust me Mr Buffett's head would spin off his shoulders if he saw OCA balance sheet.

He's spent a lifetime building that system to get hold of that 'float' money that he can use for free. But in his world, it's highly regulated and it's fought over so it's very hard to actually get and keep.

OCA has way more of this funding per dollar of our (shareholders) money than Berkshire does.

I hope you heard him say that almost nobody thinks of it like they do.

OCA is growing this free cash at 26% per year too which is WAY faster than Buffett ever has.

So the key is that most of OCA liabilities are actually extremely valuable assets, worth MORE than their equity.

And as interest rates go up this becomes far more valuable.

Yeah there are multiple reasons,

But the main ones;

OCA float growth is way higher.

Much bigger in relation to equity, MUCH bigger.

Unregulated (this is a huge one as insurers are very limited in what they can do with the funds - Berkshire less so but still)

Highly contested, so the float is so valuable the industry on average is happy to lose money in order to get hold of it.

[SailorRob]

^^ I guess the question for some of us longer term holders is when do we see a re-rate closer to "value".. sure it's a bargain but maybe it remains a bargain for 10+ years, like SR is hoping for.. It depends if you are in accumulation mode or have enough...(maybe you can never have enough)

It seems like the sentiment suggests you could pop the cash elsewhere for 12 months or more without really missing out..

Yes, but as many have pointed out I only want it to remain 'value' for 10 plus years if it is in fact cheap in relation to its intrinsic value, not because intrinsic is also declining. If I have the opportunity to buy $100 notes for $50 then I want that to last for a long time.

The popping the cash somewhere without missing out is a huge gamble...

[ValueNZ]

Yeah there are multiple reasons,

But the main ones;

OCA float growth is way higher.

Much bigger in relation to equity, MUCH bigger.

Unregulated (this is a huge one as insurers are very limited in what they can do with the funds - Berkshire less so but still)

Highly contested, so the float is so valuable the industry on average is happy to lose money in order to get hold of it.

Thanks.

Feel free to correct me if I'm wrong but one fairly significant disadvantage I see to Oceania's float is that it is relatively capital intensive. For OCA to grow it's float they need to develop property into a retirement village and sell(lend) the units, whilst an insurance company can just write an insurance policy. So as long as OCA wants to grow it's float, they'll need to continue spending cash developing these villages which have relatively low returns compared to say owning an equity portfolio.

Despite that I'm sure OCA's float comes out ahead compared to Berkshire's insurance operations, but still worth considering.