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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (6709)	4/13/1999 11:20:00 AM
From: Bob Rudd	Respond to of 78627

VC looks like speculation...I would value it like a call option. The bonds might be interesting...selling @21 for 56% YTM, but coupon rate is subject to renegotiation...not due to indenture, but more "if you don't we'll go bk"...same threat as to VTR, the related REIT, on rent reduction. VTR has issued "Going concern" warning based on issues with VC. I ran both versions of Altman on VC and it comes out borderline...but I don't think the REIT's position as defacto debt is being captured by the models. The bonds are saying the equity's toast. IR has been unresponsive. GHV...I'm long the related REIT, ETT. The Altman readings are worse here, but the bonds are trading at 12% YTM as in "Don't worry, be happy"...I put more credence in the bonds, but wouldn't buy them. Insider buying is favorable..the CFO of ETT has been a buyer which provides reassurance..but beyond that lot's of insider buying at higher levels in both GHV & VC...either they're clueless or GHV & VC aren't quite the trainwrecks the charts & valuations portray. The underlying demographic...85 and older growing at 3x the rate of the general population, gives me some hope that adjustments will be made to PPS that would enable these outfits to survive. Meanwhile, with cap rates thru the roof, there will be little building in the sector, at least from the entities like these. At some point the supply demand situation, coupled with "Blood in the streets" sentiment is going to set up some home run opportunities, but I doubt anything will look like a sure thing...except in retrospect.