OCA - Oceania Group - retirement villages

[ValueNZ]

Those bonds though...

What about it, it's not great after you account for inflation. The shares are a far better deal.

[SailorRob]

What about it, it's not great after you account for inflation. The shares are a far better deal.

No good for us but look around at what other people are into, got a fellow on 'listed property' thread saying that if one day he could get to a possible 5.56% yield that would be incredible.

Massive capital gain potential with the bonds as well, much more mechanical adjustment to rates.

[Baa_Baa]

As SailorRob has pointed out, and Maverick with his deep research and insights corroborates, I think that I could add a spin on this.

I see a market that has turned against us in recent times, and devalued all RV companies to well below even NTA, including OCA. That means a company could potentially wind up and sell its assets and pay out its shareholders more than the SP is worth on the exchange. But I doubt that will ever happen for any of them. So I think the market has significantly undervalued this OCA and many other companies as well.

What does that mean in real terms? It means, that these assets are underpriced by the market, they are 'cheap', imo, that we can take a postion in this and other devalued companies and look forward to a bright and new future. It has been a long time since we could do this, it was not so long ago that everything was over priced in the market.

Strangely though, when value does present itself after a long hibernation, that we have been accustomed to over valuation, we are paralysed and fail to recognise it or take advantage of it.

What we have here with OCA, is not a competition between other RV's, they've all been hammered by the market. Moreso it is whether you buy into a business model that is unique and whether it is sustainable, in spite of potential regulation. There is little difference between all the RV's, it is like splitting hairs, but underlying all of them is the same business model but just balanced in different ways.

I bought into a business model, with OCA and some of the others, that not only serves its customers very well, over serves them even, but is founded in something unique or very rare in business, that the customer willingly essentially finances the unlimited development growth of the company, with no interest payable to them. It is quite unusual and a unique business model. A careful balance of desirable outcomes between customer and owner.

[ValueNZ]

No good for us but look around at what other people are into, got a fellow on 'listed property' thread saying that if one day he could get to a possible 5.56% yield that would be incredible.

Massive capital gain potential with the bonds as well, much more mechanical adjustment to rates.

True about the inverse relationship bonds have with rates. If only I had the crystal ball that others on this forum have that tell them where the cash rate, the stock market, and the property market are all going within the next year... I'd be rich!

[SailorRob]

As SailorRob has pointed out, and Maverick with his deep research and insights corroborates, I think that I could add a spin on this.

I see a market that has turned against us in recent times, and devalued all RV companies to well below even NTA, including OCA. That means a company could potentially wind up and sell its assets and pay out its shareholders more than the SP is worth on the exchange. But I doubt that will ever happen for any of them. So I think the market has significantly undervalued this OCA and many other companies as well.

What does that mean in real terms? It means, that these assets are underpriced by the market, they are 'cheap', imo, that we can take a postion in this and other devalued companies and look forward to a bright and new future. It has been a long time since we could do this, it was not so long ago that everything was over priced in the market.

Strangely though, when value does present itself after a long hibernation, that we have been accustomed to over valuation, we are paralysed and fail to recognise it or take advantage of it.

What we have here with OCA, is not a competition between other RV's, they've all been hammered by the market. Moreso it is whether you buy into a business model that is unique and whether it is sustainable, in spite of potential regulation. There is little difference between all the RV's, it is like splitting hairs, but underlying all of them is the same business model but just balanced in different ways.

I bought into a business model, with OCA and some of the others, that not only serves its customers very well, over serves them even, but is founded in something unique or very rare in business, that the customer willingly essentially finances the unlimited development growth of the company, with no interest payable to them. It is quite unusual and a unique business model. A careful balance of desirable outcomes between customer and owner.

Great post.

Yes everyone wants a bargain until it's staring them in the face.

Once OCA is $2 and rising, everyone will want it.

[SailorRob]

True about the inverse relationship bonds have with rates. If only I had the crystal ball that others on this forum have that tell them where the cash rate, the stock market, and the property market are all going within the next year... I'd be rich!

Not just bonds, the equity too, but not as mechanical a relationship.

[Snoopy]

Those bonds though...

SailorRob, you have piqued my interest in the OCA010 notes, with a maturity date of 19/10/2027 with a coupon rate of 2.30%.

I see there is a quote on the market today for someone wanting to acquire some bonds for a rate of 7.8% (!). But nothing on the sell side, so no-one wants to take up such a 'generous' offer. It does make the whole exercise seem a bit hypothetical. Might be interesting if some liquidity did emerge though!

The other issue you would have if you acquired such bonds is that they would fall under IRD 'financial arrangement' rules. I was digging around on the IRD website for some 'worked examples' on this topic and found this:

https://www.taxtechnical.ird.govt.nz...20211123023345

There is a worked example in that bulletin. But you may need an accountant to understand it, as I don't believe all the steps are fully explained. I will wait with interest on your report back, when you have had a chance to go through the material.

SNOOPY

[SailorRob]

SailorRob, you have piqued my interest in the OCA010 notes, with a maturity date of 19/10/2027 with a coupon rate of 2.30%.

I see there is a quote on the market today for someone wanting to acquire some bonds for a rate of 7.8% (!). But nothing on the sell side, so no-one wants to take up such a 'generous' offer. It does make the whole exercise seem a bit hypothetical. Might be interesting if some liquidity did emerge though!

The other issue you would have if you acquired such bonds is that they would fall under IRD 'financial arrangement' rules. I was digging around on the IRD website for some 'worked examples' on this topic and found this:

https://www.taxtechnical.ird.govt.nz...20211123023345

There is a worked example in that bulletin. But you may need an accountant to understand it, as I don't believe all the steps are fully explained. I will wait with interest on your report back, when you have had a chance to go through the material.

SNOOPY

A friend bought some recently (a lot) and got that yield so it's really available. I will talk to them and review the other issue as well.

It does make some sense as you have a potential for a very large capital gain in a declining rate environment, a gain on the market realising that there are no solvency issues or you just hold and do pretty well anyway.

Have your cake and eat it.

Will respond with my findings.

[bull....]

i dont even understand how these bonds work if the bid is .078 what does this mean ?

[Snow Leopard]

...There is a worked example in that bulletin. But you may need an accountant to understand it, as I don't believe all the steps are fully explained....
SNOOPY

The mystery bit is: "It will be found that the constant annual rate R is 16.2308% per annum." But I can reveal it is done by simply hooking the logic circuits of a Bambleweeny 57 Sub-Meson Brain to an atomic vector plotter suspended in a strong Brownian Motion producer (say a nice hot cup of tea)