lol @ Maslow getting thrown around in an OCA thread.... Big in Psych 101
I thought you did a commerce degree Beagle. ;+)
PS so as to add some value to my post, NB the bonds are redeemable after 3 years so there is not necessarily so much upside as one might hope in the long run.
Oceania Healthcare may elect (at its discretion) to redeem all, but not some only, of the Bonds on any Interest Payment Date after the third anniversary of the Issue Date by giving not less than 20 Business Days’ notice of the redemption date.
If the Bonds are redeemed early in this manner, they will be redeemed for the greater of:– their Principal Amount; and– their market price (excluding interest), calculated as the arithmetic average of thedaily volume weighted average price (excluding interest) of Bonds traded through theNZX Debt Market over the 10 Business Days immediately prior to the date on whichOceania Healthcare gave the redemption notice
So if interest rates keep going down then after 3 years OCA might take you out at market rates and erode any further potential. Redeemable bonds are a bit one sided if you ask me
Back in the 1980's you got up to 3 optional papers out of 20 so the dog got his snout into other interest area's including psychology and investment analysis, both just "slightly" more interesting than all the super boring bean counter stuff lol
My read on the early redemption thing is they would have to pay people out at market value so if the bond was trading at (just say for argument sake) 1.5% yield to maturity at the three year point they'd have to pay you out the difference between 2.3% and 1.5% (0.8% per annum for the remaining 4 years. ~ about a 3% capital gain). Does that sound right to you mate ?
2.3% is super low BUT that's exactly double the rate the BNZ (1.15%) will pay you on a 5 year term deposit and with the open banking resolution I know where I'd rather have my money.
Last edited by Beagle; 05-10-2020 at 03:24 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
thats great to hear that you voluntarily rounded yourself out Beagle. I personally highly value my arts and science papers but always spent my first part of the day reading the business section of the Herald at the UG reading room.
Yes you would get all existing capital gain if forcibly redeemed at market when they paid you out but... DURATION . You're not necessarily getting a 7 year bond which is what you bought. Maybe this only really matters to portfolio construction nerds. I just think that if you go for these extended length bonds (by that I mean 7 instead of the usual 5) then part of the reason you do this is to lock in these low rates for as long as possible because you think the world is going to hell in a handcart.
Or you may be going for the immediate capital gain quite likely if it goes at anything over 2% but many people hold bonds until maturity and they count on that being the full stated length of the prospectus. SO NB
Enough said.
I wish Earl would conveniently forget to put this chart in his presentations ......and just use their preferred UnderlyinG EBITDA instead.
this chart is far from inspiring ....quite depressing really
Winner, the magic word is "inflection point". Just allow your phantasy to imagine how this curve will work out from here (hint - top right corner ... ). Very inspiring ... just close your eyes and dream ....
----
"Prediction is very difficult, especially about the future" (Niels Bohr)
Awesome article Winner, loved this part... Most value investors arrive for the party two hours early and make awkward chit-chat with the hosts over a bowl of dip. We arrive a half-hour late, a couple of other guests have already arrived and the conversation is flowing. Soon the party will be in full-swing. Later on, when Mr Market has gotten drunk and starts making a scene, we’ll make a polite exit.
. .. thanks
Beagles proposed waiting for 30 day moving averages to turn looks a similar kind of approach after identifying the inflection point.
Not sure that he obeyed this strategy though - things tend to move very fast when they do as that article outlines
Nice call as a trader bull...for investors though, the next five years are going to be very exciting with strongly growing profits and dividends.
Inflection points are almost always rewarding in more than one way. My theory is that reputation and trust is always earned and never given freely by the investment community. As profit steadily grows in the years ahead I think its highly likely OCA will earn the trust, reputation and respect of investors and we will see not only strong growth in earnings and dividends but a rerating towards a market medium PE for this sector of about 18.
I can foresee eps of 18-20 cents earnings per share in 4-5 years time and a market medium PE of 18...Hmmm that's $3.24 - $3.60.
Last edited by Beagle; 06-10-2020 at 12:12 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
breaking out on summerset update 1.20 resistance broken next test might be 1.32 pivot from last time , im back in just had to mossy over to the power stocks for some gains as well recently lol
Reply With Quote
Originally Posted by peat
Bookmarks