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Strategies & Market Trends : Value Investing
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To: valueminded who wrote (9975)2/15/2000 11:53:00 PM
From: James Clarke  Read Replies (4) of 78661
 
SNH could go to 6. I won't argue with you.

SNH offers something very rare. Economics I think I have done my homework on, and a shareholder base which will sell every time it goes to a new low because it is a recent spinoff with a lot of retail investors. I have no reason to believe that the market is efficient here, so I just watch what is going on economically. If something happens to shake my analysis I will change my strategy. If not, I hope it goes to 4, because I am a buyer, not a seller.

I don't expect everybody to share my view. My background is real estate, and I am in contact with management, so I think I understand what is going on and feel capable of following the turnaround in detail. Stocks other people on this thread have similar confidence in are outside of my circle of competence, so I don't mess around with them.

The risk in SNH from my perspective is not that it goes to 6. The risk in SNH is that my real estate analysis is wrong. Period. Mike came to the same conclusion independently of me. When I talked to company management the first time I found that my estimate of the sustainable dividend was within 10% of theirs.

The current dividend will be cut within the current quarter. Know that going in. There may be a scary period with a lower dividend in between, but a year from now this company will pay a solid dividend in the $1.50-$2.00 range. The stock trades at $8 1/4, (going to 6?).
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