I did talk to HRC about the purchases, and they are all company-financed. You can read about it in the April proxy. It's near the front. There's a maximum of $50 million available for this executive loan program. The stock is collateral, and there is a margin feature to it.
When I kind of made the point (by remaining silent)to the CFO's rep that this didn't make me happy he said "but they are all full-recourse loans," somewhat defensively. Of course this means that if the stock goes to nothing, then the company can lay claim to the personal assets of the insiders. One kind of assumes it would be this kind of loan, but I guess it's good to know anyway.
Much has been made about company loans to insiders for stock purchases, but I am not sure they are altogether a bad thing. I see that the idea is to encourage a lot of investment without requiring a large cash lay up front, and I can understand that. I still like to see them lay out the cash, though.
I continue to like HRC. There is a lot that's cheap in the health care sector, and HRC is definitely still one of them. It is also a screaming tax-loss sell for most institutions, so I expect more pressure before the year is out. Another one I like is Senior Housing, the HRPT spin-off that has been neglected. I reviewed that over on the site too.
Good investing,
Mike |
