OCA - Oceania Group - retirement villages

[Beagle]

Great minds think alike !

[clearasmud]

Great minds think alike !

I must be a great mind too!

[Scrunch]

Hahaha,just having a laugh at myself.Im in no particular hurry.Why would Salts buy into two companies in the same sector and short one of them winner?Cant figure it out

Because its reduces your invested capital into the sector and has the potential to generate very high returns on your net capital invested. SALT may be buying what they think is the cheap half of a paring but using the RYM/OCA pairing. There is a lot more discussion on this forum around the Couta theorm involving SUM and RYM and 50%. If both continue to move in parallel then you simply get the returns the sector offers. If the gap narrows, your returns are a lot higher. If the gap widens you do worse from the increased leverage.

Lets say you think RYM should be 10x OCA's price as (occurred in late November 2018). On 5 May 2019 you observe the prices OCA @ $1.00 and RYM at $12.06. You want to invest a net $10m.

Option1: Invest $10m in OCA.
Option2: Invest $30m in OCA and short $20m in RYM (or 1.66m shares) for a $10m net investment.

If OCA were to then increase to $1.20 you make $2m in option1.
Under option2 you could make $6m (if RYM didn't increase) from an OCA increase to $1.20. Even if RYM increased, but stayed below $14.47 your returns are still higher than just doing an option 1 purchase.

[Cyclical]

Because its reduces your invested capital into the sector and has the potential to generate very high returns on your net capital invested. SALT may be buying what they think is the cheap half of a paring but using the RYM/OCA pairing. There is a lot more discussion on this forum around the Couta theorm involving SUM and RYM and 50%. If both continue to move in parallel then you simply get the returns the sector offers. If the gap narrows, your returns are a lot higher. If the gap widens you do worse from the increased leverage.

Lets say you think RYM should be 10x OCA's price as (occurred in late November 2018). On 5 May 2019 you observe the prices OCA @ $1.00 and RYM at $12.06. You want to invest a net $10m.

Option1: Invest $10m in OCA.
Option2: Invest $30m in OCA and short $20m in RYM (or 1.66m shares) for a $10m net investment.

If OCA were to then increase to $1.20 you make $2m in option1.
Under option2 you could make $6m (if RYM didn't increase) from an OCA increase to $1.20. Even if RYM increased, but stayed below $14.47 your returns are still higher than just doing an option 1 purchase.

Nice explanation there, Scrunch. Is that effectively what peat is referring to over at the MET thread when talking about Salt?

being short RYM likely means that they can go hard on the long side of the equation as sectoral risk is greatly reduced - something a fund will have to bear in mind

[winner69]

Hahaha,just having a laugh at myself.Im in no particular hurry.Why would Salts buy into two companies in the same sector and short one of them winner?Cant figure it out

Hey nev

Ryman may be Salts largest short but Turners is on of their largest longs

Seems they have more in Turners than Oceania

[fish]

Bought even more today for reasons previously stated. Doing a Couta1. Maverick and Couta1 will be proud of me.

I think this is really good timing and the chance of it hitting 85 cents in the next 4 weeks is many times higher than the chance of falling 5 cents to 70.
Next year more chance hitting $1.20 than falling to 50 cents.
All the main retirement villages have proven to be safe in this crisis and the changing demographics will ensure future demand.

The lockdown has eliminated corvid-19 with the danger of this hitting Oceania or met so in my opinion a good time to buy before most investors start to look to invest again.

[Onion]

I think this is really good timing and the chance of it hitting 85 cents

That would suit me just fine as that is my average cost, having doubled down with a 47c buy in March.

[Beagle]

I think this is really good timing and the chance of it hitting 85 cents in the next 4 weeks is many times higher than the chance of falling 5 cents to 70.
Next year more chance hitting $1.20 than falling to 50 cents.
All the main retirement villages have proven to be safe in this crisis and the changing demographics will ensure future demand.

The lockdown has eliminated corvid-19 with the danger of this hitting Oceania or met so in my opinion a good time to buy before most investors start to look to invest again.

Thanks Fish. I have been searching hard for reliable dividend yield which I can set and forget and yield that will grow over time in my retirement, (I want to retire in the next few years). Its really hard to find stocks that fit this bill in the current circumstances. At 78 cents its on a yield of 6.3% and taking a long term view its highly likely that dividends will grow in the years ahead.

[nevchev]

Hey nev

Ryman may be Salts largest short but Turners is on of their largest longs

Seems they have more in Turners than Oceania

Never really been enthusiastic about turners.had a couple of bad experiences with them as a young fella buying cars

[Cyclical]

I think this is really good timing and the chance of it hitting 85 cents in the next 4 weeks...

It was happily trading in the 83-86c range a month ago, so we should be back there in a flash now the downward pressure (presumably from Salt) appears to be gone.