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Strategies & Market Trends : Meditrust NYSE: MT
MT 37.86+1.1%Nov 6 3:59 PM EST
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To: WILLIAM C KLEMA who wrote (126)11/8/1999 3:25:00 PM
From: Charles Holewinski  Read Replies (2) of 233
 
Bill,

Owning 2000 shares of MT at 12, I am encouraged by your optimism. It was a given months ago that the dividend would be cut because of the three items, i.e. loss of paired share, lower MEDICARE payments and the problem with on of the tenants. But at some point all of bad news has to be in the price of the stock. Obviously at 6 one has to ask, how much lower can this one go? The absolute answer is 6 points lower but that is not the case here since MT is not about to disappear.

I remember myself looking at the price of stocks and as they got lower I started to think how I would load up after the price went even lower. And guess what, the price never got lower and I didn't load up and I didn't make the killing I though I would. If you think the price looks low here, buy some and if it goes lower buy some more and if it goes even lower buy some more. Of course this is assuming that the prospects for MT don't change significantly from what they are today.

Also ask yourself what is the worst realistic thing that can happen to MT. I don't think they are going out of business. The worst thing it seems to me is that they will have lower earnings and therefore have to cut the dividend. If the dividend is cut 1/2 to .92 cent per share at 6 that is 15.33% yield and at 5 the yield would be 18.4%. If the dividend is cut even lower to 80 cents at 6 the yield is 13.33%.

In this crazy market all sorts of wild things are happening and perhaps with that kind of market psychology we might see lower prices for MT, but at 6 a nice nibble here seems appropriate.
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