RYM - Ryman Healthcare

[Beagle]

Roger , do you work for Morningstar ?

No absolutly not. Its just that when a stock goes up 500% in 5 years and isn't backed by growth in earnings at anything even remotely like that, some of us arn't afraid of making the call that the stock is a sell and has run well ahead of itself.

By the way, I see the analyst at Craig's that's also rates RYM a sell was again voted as one of N.Z's top analysts at the recent industry awards, sorry havn't got a link at this point in time.

Stoploss - Believe it or not, some people enjoy a good healthy debate.

[Vaygor1]

No absolutly not. Its just that when a stock goes up 500% in 5 years and isn't backed by growth in earnings at anything even remotely like that, some of us arn't afraid of making the call that the stock is a sell and has run well ahead of itself.

I have stated this before.
RYM has gone up 400% in 7 years.
7 years ago RYM was a bargain at $2.15. Today it is $8.40
Equates to 21.5% per annum compounding.

Result: SP growth has matched earnings growth.

Refer http://www.sharetrader.co.nz/showthr...l=1#post478686 and the following 3 posts by myself and Winner.

[Vaygor1]

Vaygor - what about over the last 12 months? What was the sp growth and underlying profit growth over that period?

12 months is too short a time frame for the measure. 10 years is too long in my opinion too.

One can look at a range of RYM Share Prices as datum points over 10 years for what the share was 'worth' then…. and a range of SP over the the last 12 months say to deem what the share is worth now.

Using different datum points and different current worth values, one can get a large range in calculated growth rate.

What I do know is this. In 2007 I bought RYM shares when there PE was 35. Seven years on, I am confident that that particular purchase will give me pre-tax 100% return on my investment in dividends alone within 14 years. In terms of earnings I would need to get out the calculator but I think that very purchase has already earned itself more than what I paid for them…. in only 7 years.

Isn't RYM's PE 35 at the minute? I should buy more... but I have enough... and need to diversify my portfolio a bit more.

[Vaygor1]

Cards on the table. Here are my purchases of RYM. I have never sold:

Sept 2007 Bought at $2.11
Sept 2007 Bought at $2.08
Oct 2007 Bought at $2.16
Oct 2007 Bought at $2.16
Oct 2007 Bought at $2.08
Nov 2007 Bought at $2.15
Nov 2007 Bought at $2.06
Nov 2007 Bought at $2.09
Nov 2007 Bought at $2.10
Jan 2008 Bought at $1.99
Jan 2008 Bought at $1.88
Jan 2008 Bought at $1.88
Nov 2008 Bought at $1.38
May 2009 Bought at $1.61
July 2009 Bought at $1.57
July 2009 Bought at $1.68
April 2010 Bought at $2.10
April 2010 Bought at $2.09
June 2010 Bought at $2.07
July 2010 Bought at $1.98
Dec 2012 Bought at $4.17
Dec 2012 Bought at $4.15
Feb 2013 Bought at $4.52
Mar 2013 Bought at $4.80
Mar 2013 Bought at $4.93
Mar 2013 Bought at $5.06

Average buy price taking volume of each purchase into account is $2.42 including brokerage.

For sake of simplicity, assume each buy order was an equal amount of shares. You can imagine around Nov 2008 how much I was wishing I had held off buying… how anxious I was about RYM's future. The mixture of emotion… delight at being able to buy more at an even cheaper price combined with immense frustration at making a large paper loss on my then investment to date.

But after being through what I have been, if RYM were to drop by the same ratio today as it did between Sept 2007 and Nov 2008, that would make its share price $8.40 x 1.38/2.11 = $5.49 at which point, given RYM's predictability, I would buy the entire company if that were at all possible. Even $7 would be a steal. So the question begs is $8.40 today too expensive? Not in my most humble of opinions, nor obviously the current opinion of the directors. https://www.nzx.com/companies/RYM/announcements/250763

[Winston001]

I'm a longterm holder too and can't remember when I bought RYM - 2005 probably.

Nevertheless I am considering selling some to insulate against any major downturn in the markets.

The other reason is that high PE stocks always fall back to average, even Berkshire Hathaway. If this was not true then RYM would be on track to be the largest company in the world and own everything. That's silly. In reality all businesses reach a maturity where future growth becomes modest and reliable and the PE drops way down.

I've seen too many NZ businesses fail in Australia. I can't see what is so specialised about retirement villages that RYM will succeed above Australian operators. It isn't rocket science.

Having said that, on the strength of the NZ operation alone I expect to continue to hold RYM long term.

[Beagle]

I have stated this before.
RYM has gone up 400% in 7 years.
7 years ago RYM was a bargain at $2.15. Today it is $8.40
Equates to 21.5% per annum compounding.

Result: SP growth has matched earnings growth.

Refer http://www.sharetrader.co.nz/showthr...l=1#post478686 and the following 3 posts by myself and Winner.

Its interesting that the last time you bought on a PE of 35, (your first purchase) the SP declined by approximatly 25% in the following two years and they have never been on a PE of 35 again until very, very recently which serves to illustrate my point and that made by Winner 69 earlier in this thread that they're not worth a PE of 35 and the short term could see a meaningful and for some people a very painful price reallignment, especially if they recently paid $9. If history repeats and the company becomes more reasonably valued with a similar 25% drop I think they'll be good buying at around $6.20 provided their growth record stays intact in the meantime. This is by no means a certainty.
If growth slows this year like I think it will you could easily see the market darling status being brought into question and a lower PE in the mid - late 20's could result. Personally I think a 20-30% price correction is quite likely in the next 18-24 months whereas the prospect of the same quantum in SP gain is exceptionally unlikely.

[Vaygor1]

Its interesting that the last time you bought on a PE of 35, (your first purchase) the SP declined by approximatly 25% in the following two years and they have never been on a PE of 35 again until very, very recently which serves to illustrate my point and that made by Winner 69 earlier in this thread that they're not worth a PE of 35 and the short term could see a meaningful and for some people a very painful price reallignment, especially if they recently paid $9. If history repeats and the company becomes more reasonably valued with a similar 25% drop I think they'll be good buying at around $6.20 provided their growth record stays intact in the meantime. This is by no means a certainty.
If growth slows this year like I think it will you could easily see the market darling status being brought into question and a lower PE in the mid - late 20's could result. Personally I think a 20-30% price correction is quite likely in the next 18-24 months whereas the prospect of the same quantum in SP gain is exceptionally unlikely.

It is interesting Roger, I agree.
Winner might be able to give me the PE for each purchase. I don't have the data and I am on holiday at the moment. I am not sure if 35 was the highest PE I purchased at.

For RYM, my message is that buying at a PE of 35, considering their growth, was a move that I can look back at and be very very happy with. Buying with a PE under 35, which is probably the case from the 1st purchase until around Dec 2012 really was an extra bonus period and provided a return that most investors can only dream of. Looking forward, the share will bounce around as usual but theoretically it's price is going up on average by 2.9 cents a week given RYM'S current growth rate. Means that all other things being equal SP = $10.66 in 18 months. So a market contraction would have to be significant to bring it down to $6.60 in 18 months from now. I have trouble envisaging that unless the NZ sharemarket itself collapses for some reason. I can however imagine (just imagine) the share stagnating for a good length of time in the $8 to $9 range due to market sentiment but I still think this is unlikely and will continue rising.

Attachment 5861

I get the feeling from your posts that you are experiencing the same issues with SUM now, as I did with RYM from Jan 2008 to Jan 2012 (refer graph). That is 4 years and a bloody long time to wait. In the SUM thread you have stated that you are in boots and all after selling out of RYM http://www.sharetrader.co.nz/showthr...l=1#post441324 and that if SUM's SP doesn't reach at least $4.33 by early November this year you will eat your hat. http://www.sharetrader.co.nz/showthr...l=1#post438892

In 5 months from now, you may have to get the cutlery out. But if so, that is still okay. One year or even two is a relatively short wait compared to the four years I had to wait. SUM could also drop like RYM did and you will experience the same mixture of delight and further frustration as I did but if you hang in there and use the opportunity to buy more, you will ultimately come out well on top.

Two of your other post of yours I note with interest:
http://www.sharetrader.co.nz/showthr...l=1#post444465 and
http://www.sharetrader.co.nz/showthr...l=1#post471685

I can 't even begin to imagine what you and your family must have gone through and I am truly sorry to hear what happened here. As difficult as it must be though, I can only advise to try your best to separate being a shareholder from being a customer. I used to be a shareholder (and concurrently a customer) in WestpacTrust (WPT) going back. As a WPT shareholder I was very happy. As a WestpacTrust customer I was extremely unhappy. It was hard enough to keep the two separate without experiencing the emotional torment you must have undergone. I haven't lost a parent yet and can not even begin to imagine what that must be like.

Hang onto your SUM. I envisage some rocks on the path with them, as you do with RYM. But ultimately patience, and the strength of your convictions not to sell will prevail.

[Beagle]

Thanks for your kind words and advice mate. I've recovered from that very difficult part of my life now and Dad is in a better place now
I admire the tenacity you've shown to hold through the ups and downs of Ryman's journey as a company. In the very long run I am sure they will continue to reward you and others. What you've suggested, (a period of price stagnation in the $8-9 range is probably the most likely outcome of the correction process as the company continues to grow its PE gets more realistic but shareholders have to endure an unimputed 1% dividend yeild for a period of time with no SP gains. The correction scenario is something I see as almost equally likely and a 20-30% SP gain over the next 18-24 months is something I would see as a less than 5% chance.

I am polishing the cutlery up Since posting that remark on SUM some time back its clear they're not growing as quickly as I originally anticipated. I think the holding costs of carrying seven years land supply, (which is a policy I must confess I'm not entirely comfortable with), will also be a factor in this year's results and have pulled back on my estimate for 2014.

To be honest I think the whole sector isn't cheap by any stretch of the imagination and am looking for better value elsewhere and finding it.

[Joshuatree]

And the winner is...... Metlifecare Year To date 31.45% gain

Ryman YTD 27.5%

Summerset YTD 17.06% source NZX

Correction folks MET has outperformed RYM and SUM over 1 YEAR not YTD. Even more impressive

[blocker3]

Correction folks MET has outperformed RYM and SUM over 1 YEAR not YTD. Even more impressive

I am surprised by the result Joshuatree. Just shows you that MET can have its day and shows that it can shine also.Cheers