OCA - Oceania Group - retirement villages

[SailorRob]

Talk yourself up why don't you!
I asked a couple of basic questions and picked up the concept in about 10 seconds, without even having looked at the balance sheet, which I will when I get time to assess how much value is understated.
It's hardly rocket science buddy.

Baa_Baa managed to explain it in one succinct sentence.



How many years do you say you have been trying to explain it?

You've again totally missed the entire point we're making. Keep at it.

[SailorRob]

Great commentary Maverick
Nov/Dec 2023 may be the nadir of commercial property and thus RV valuations and sentiment. We will find out during 2024.
I spoke to a high performing commercial property sales manager earlier this year who has sold properties for a large trust that I recently retired from as an independent trustee . I asked about the disconnect between interest rate driven property valuation methodology and reality. He said he was selling plenty of properties to astute long term investors who were looking through the under valuations produced by the sclerotic mandated valuation methodology and the true value. These investors are willing to buy on what seems a low yield because they have calculated - the cost of the bare land and the replacement cost of the building including the onerous legal, consenting, engineering etc fees. Where the market price is deeply discounted to the NTA they jump in. That is why I am holding more shares than the directors who have just topped up their holdings in OCA. For me RV stocks are essentially a property play.


All meaningless.

NTA totally meaningless, why does Apple trade at 50 x NTA?

All that matters is the net cash flow the assets produce over the next 50 years, what happens to that cash if there is any and what rate you discount it at.

Replacement costs etc mean nothing unless they force net cash flows in future up due to supply demand inbalance.

Waiting to hear the examples of Buffett always focusing on discount to NTA.

All these commercial property nuts have been doing is riding a 40 year declining discount rate...

[Daytr]

Well not 'nobody', there's a few who get it.

Unfortunately current accounting principles and practices fail to recognise that the accumulated revenue is only repayable in a lessor percentage (the remains are float), and are repeatable and grow, ad infinitum, and ergo the withholdings or retained revenues are assets (albeit held as liabilities on the balance sheet under current accounting practices), that can be and are leveraged, interest free, into growth of the asset base.

Really, the fundamental value proposition of these RV's seems to be largely misunderstood which imo is surprising as the business model has been in play for decades. It must be imo because accounting practices do not or fail to account, for the value of the withholdings (retained earnings) and put them on the opposite side of the balance sheet ledger than where they in reality belong.

Like you say, there's circa a billion dollar of assets (cash) that is withheld and retained, but perversely, reported as a liability. WTF, it's insane. And people get upset about SP ratio to NTA, without realising NTA is, under current accounting practices devalued by ~a billion $

If they added those withheld/retained earnings, as assets, which they should, then the SP is massively below NTA/NAV, way more than the current 50% discount or thereabouts. Which makes the SP massively underpriced.

Go figure. It makes no sense. The beanies have control of the narrative when reality is far from it.


You've again totally missed the entire point we're making. Keep at it.

Nope I get it, I just don't have to paint a picture by numbers to explain it. As I said it's not rocket science.
Baa_baa's post above was far more informative than anything you have written. Although I already had the gist of that component.
But his comment re the NPV that really intrigued me especially in a high interest rate environment.
Anyway, as I said I haven't even looked at the financial statements yet and it's not a priority right now.

[thebusinessman]

Spelling and grammar is an attention-to-detail thing, often associated with intelligence, but neither of those two things guarantee someone success in the real world. You can get very bogged down in detail and intellectual analysis when you just should be doing something.

[Ricky-bobby]

Spelling and grammar is an attention-to-detail thing, often associated with intelligence, but neither of those two things guarantee someone success in the real world. You can get very bogged down in detail and intellectual analysis when you just should be doing something.

Yep totally agree! Hire a CFO with an audit background is a sure way to screw ur business.

[SailorRob]

Nope I get it, I just don't have to paint a picture by numbers to explain it. As I said it's not rocket science.
Baa_baa's post above was far more informative than anything you have written. Although I already had the gist of that component.
But his comment re the NPV that really intrigued me especially in a high interest rate environment.
Anyway, as I said I haven't even looked at the financial statements yet and it's not a priority right now.

You've read all my OCA posts?

[SailorRob]

Spelling and grammar is an attention-to-detail thing, often associated with intelligence, but neither of those two things guarantee someone success in the real world. You can get very bogged down in detail and intellectual analysis when you just should be doing something.


Ivv u rite in cumplite pig in inglish u cum acros az sumthin wot dat iz difrimt to difrimt pepel.

Bad spelling and grammar is just on a sliding scale to the above, depending where you want to sit and how you're perceived.

I bet physical appearance and health, social skills would all match rather well too.

[bull....]

test your IQ ... basic test

https://www.123test.com/iq-test/

i did the culture fair . for english natives

[Daytr]

You've read all my OCA posts?

Hell no. I would rather drive needles into my eyes.
But Baa_baa managed it in one line. The rest just fell into place.

[X-men]

The best to describe this stock....get down...Get low...Get out.... fast!!!!

[ValueNZ]

yep in accounting there is always a match off some where.
Where's the match off and can I watch it

[ValueNZ]

lost me on this statement. cause they affect the bottom line , why because if you pay out dividends that mean less assets and less money to invest and grow earnings which effects the bottom line.
Yeah of course a return earnt on retained earnings would increase profit. It's just the way Daytr framed it made it seem like paying a dividend would result in a loss, as if dividends were an expense.

"Operation is running potentially at a loss after paying dividend"

[Daytr]

Yeah of course a return earnt on retained earnings would increase profit. It's just the way Daytr framed it made it seem like paying a dividend would result in a loss, as if dividends were an expense.

"Operation is running potentially at a loss after paying dividend"

I didn't imply a loss, just that they were borrowing more money whilst paying dividends.
Anyway they have stopped paying dividends now. I.e could the profits have funded the dividend paid.
I don't know as I haven't looked at the numbers.

[SailorRob]

Baa_baa's post above was far more informative than anything you have written.


You've read all my OCA posts?


Hell no. I would rather drive needles into my eyes.

Posted without comment.

[SailorRob]

Talk yourself up why don't you!
I asked a couple of basic questions and picked up the concept in about 10 seconds, without even having looked at the balance sheet, which I will when I get time to assess how much value is understated.
It's hardly rocket science buddy.

Baa_Baa managed to explain it in one succinct sentence.



How many years do you say you have been trying to explain it?


Baa_baas sentence referred to was 'It is not realised by the assets, its value will be realised in long term discounted cash flows'.

Umm Daytra... This one sentence from BaaBaa you refer too, this is the 101 of all investing. This is the fundamental for everything.... He wasn't explaining the specifics about OCA balance sheet and float funding with the sentence above.

You must realise that without cash flows assets are not particularly valuable... it's the cash flows they produce that give assets value....

This post of yours is hugely revealing, ask for help and someone here will teach you. Coloured lines moving up and down on your cellphone screen is not what makes money sunshine. It's the future net cash flows discounted to present.

[Daytr]

Baa_baas sentence referred to was 'It is not realised by the assets, its value will be realised in long term discounted cash flows'.

Umm Daytra... This one sentence from BaaBaa you refer too, this is the 101 of all investing. This is the fundamental for everything.... He wasn't explaining the specifics about OCA balance sheet and float funding with the sentence above.

You must realise that without cash flows assets are not particularly valuable... it's the cash flows they produce that give assets value....

This post of yours is hugely revealing, ask for help and someone here will teach you. Coloured lines moving up and down on your cellphone screen is not what makes money sunshine. It's the future net cash flows discounted to present.

As per usual you assume too much but no very little. I'll just leave it there as you consume far too much time for little return.

[ValueNZ]

As per usual you assume too much but no very little. I'll just leave it there as you consume far too much time for little return.
What assumption are you referring to.

I'll second SailorRob's post, all an investment is ever worth is the present value of all future cash flows of the investment. OCA or not.

[Daytr]

What assumption are you referring to.

I'll second SailorRob's post, all an investment is ever worth is the present value of all future cash flows of the investment. OCA or not.

About my level of understanding.
As I have said it's not rocket science.
Why is he so concerned that I need his help?
I didn't ask for it.
Ego.

OCA is a passing interest for me.
If I have the inclination I will investigate more.
It's really no one else's business.

[SailorRob]

As per usual you assume too much but no very little. I'll just leave it there as you consume far too much time for little return.


*know very little

[Daytr]

*know very little
Yawn.......

[SailorRob]

ask for help and someone here will teach you.



Why is he so concerned that I need his help?


Posted without comment.

[Daytr]

Baa_baas sentence referred to was 'It is not realised by the assets, its value will be realised in long term discounted cash flows'.

Umm Daytra... This one sentence from BaaBaa you refer too, this is the 101 of all investing. This is the fundamental for everything.... He wasn't explaining the specifics about OCA balance sheet and float funding with the sentence above.

You must realise that without cash flows assets are not particularly valuable... it's the cash flows they produce that give assets value....

This post of yours is hugely revealing, ask for help and someone here will teach you. Coloured lines moving up and down on your cellphone screen is not what makes money sunshine. It's the future net cash flows discounted to present.

Just adding to my response.

Wow really. That was worth posting .
Who knew cashflow is valuable!
Gawd give me a break.

[Habits]

Oh man here we go!!!

See this is why I say nobody gets it.

There are about 4 of us that do... even when you explain it some folk cannot get it through their skull!

Without this supreme ignorance we as investors would have a hard time of it.


So far over the head it's not funny.

My mate thinks he is a smart businessman. After building a house he lets people stay in it rent free (that's not smart!). The occupants lend him their money with which he can build another house and he does not have to beg the banks to borrow all the money he needs or pay their stupid interest rates. Over the last 20 years it worked out better than he could expect from reaping capital gain (that is smart). The trouble is he got over-confident thinking he can continue the model to the moon forever, now having to downsize.

[ValueNZ]

My mate thinks he is a smart businessman. After building a house he lets people stay in it rent free (that's not smart!). The occupants lend him their money with which he can build another house and he does not have to beg the banks to borrow all the money he needs or pay their stupid interest rates. Over the last 20 years it worked out better than he could expect from reaping capital gain (that is smart). The trouble is he got over-confident thinking he can continue the model to the moon forever, now having to downsize.
People are charged for the right to occupy a unit, through deferred management fees. Not rent free like you claim.

[SailorRob]

My mate thinks he is a smart businessman. After building a house he lets people stay in it rent free (that's not smart!). The occupants lend him their money with which he can build another house and he does not have to beg the banks to borrow all the money he needs or pay their stupid interest rates. Over the last 20 years it worked out better than he could expect from reaping capital gain (that is smart). The trouble is he got over-confident thinking he can continue the model to the moon forever, now having to downsize.

Capital gain isn't part of my equation and the business doesn't need it to do well

For obvious reasons the long term return on property is zero, some exceptions but even those cannot compound much faster than GDP.

You have a massive misunderstanding of the business model. Your mate is in fact smarter than hell, his tennants pay him the rent in advance!

[Habits]

People are charged for the right to occupy a unit, through deferred management fees. Not rent free like you claim.

No you assume too much, making an ass out of you.

[mike2020]

No you assume too much, making an ass out of you.

Ok, take a 500k deposit 5 years at 5.5%. Net 101k after 33% tax. Call it rent. Imagine if they stop building.

[Habits]

Ok, take a 500k deposit 5 years at 5.5%. Net 101k after 33% tax. Call it rent. Imagine if they stop building.

My mate doesn't think like you or I, when interest rates were low he added to his portfolio. But now, the opposite is happening.

[SailorRob]

My mate doesn't think like you or I, when interest rates were low he added to his portfolio. But now, the opposite is happening.


Smart man for sure. Free money is worth far more when rates are higher.

[Maverick]

Now I've tidied up all my work after reporting season, just for fun I thought I would see where OCA might roughly be, should it stop reinvesting in more land and developments, and just call it a day and finish their current pipeline.

Here's the parameters.
A. All values are at today's expenses and revenue rates.
B. No allowance for resales is included. I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.
C. Clearly, no new sales margins
D. Villages are all completed and sold down to normal occupancy rates over the next 8 years.
E. I don't know what corporate costs will be as many staff won't be needed. I have retained the current expense ratios for this exercise which will no doubt be too high.

So in about 8 years when all this is finished and sold what are we left with?

Underlying Profit should be around $71m ( to compare today's annual unpat with resales removed is $31m - but this obviously includes new sales profit).

To make the numbers real simple… 2032that's $10c EPS + inflation value. So again, because this concept is so important, the $.10c is ON TOP OF inflation.

Here's the kicker …2032 …OCA now has no debt and a $2.4B cash float !

If OCA were to achieve a return of 5% net on this free cash float that's $.20c EPS extra! Yep , 200% more than what they will be making on their properties.

The only 2 questions to ask;


What would you pay for a share making $0.30 EPS ( that is inflation indexed) ?
What kind of mega industry would want to buy this return and access to this source of cash the most?


You can love or hate Sailor as much as you like but he is the one correctly banging on about the “float” , trying to get people to see the ultimate real value of these companies.

He's right , these future numbers are incredible and have feck all to do with what nurses are paid.

[SailorRob]

I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.


Yep there is no question that in NZ from 2003 to 2007/8 and from 2014 onward that average price movements exceeded inflation (or reported inflation at least) BUT this is not the long run, lets see how these periods fit into the long run. They came about from multiple expansion of 3 x debt to income to 8-10 times, this cannot keep happening and can also mean revert.

If you take a group of random home sales from the 80's or 70's in any NZ location and compare to today even with the historically anomalous periods described above, you will see they compound at roughly inflation, so without the recent multiple expansion you'd be deep in the hole.

Look at European data sets where we have 500 years of history... Obviously over 500 years something non productive cannot compound faster than inflation.

Same in US cities.

There can be profit if you can time the very short periods where prices exceed inflation, and after say 7 years of this everyone forgets and thinks it goes on forever...

[winner69]

Rymans float is humungous …heaps more than Oceania’s

Do Mav’s exercise on Ryman …wow wow wow …incredible

[SailorRob]

Now I've tidied up all my work after reporting season, just for fun I thought I would see where OCA might roughly be, should it stop reinvesting in more land and developments, and just call it a day and finish their current pipeline.

Here's the parameters.
A. All values are at today's expenses and revenue rates.
B. No allowance for resales is included. I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.
C. Clearly, no new sales margins
D. Villages are all completed and sold down to normal occupancy rates over the next 8 years.
E. I don't know what corporate costs will be as many staff won't be needed. I have retained the current expense ratios for this exercise which will no doubt be too high.

So in about 8 years when all this is finished and sold what are we left with?

Underlying Profit should be around $71m ( to compare today's annual unpat with resales removed is $31m - but this obviously includes new sales profit).

To make the numbers real simple… 2032that's $10c EPS + inflation value. So again, because this concept is so important, the $.10c is ON TOP OF inflation.

Here's the kicker …2032 …OCA now has no debt and a $2.4B cash float !

If OCA were to achieve a return of 5% net on this free cash float that's $.20c EPS extra! Yep , 200% more than what they will be making on their properties.

The only 2 questions to ask;


What would you pay for a share making $0.30 EPS ( that is inflation indexed) ?
What kind of mega industry would want to buy this return and access to this source of cash the most?


You can love or hate Sailor as much as you like but he is the one correctly banging on about the “float” , trying to get people to see the ultimate real value of these companies.

He's right , these future numbers are incredible and have feck all to do with what nurses are paid.



An incredible important concept, that under the scenario you paint here the float would slowly turn into CASH that would have NO restrictions at all and could be invested in Equities or as I have highlighted before just get invested in bonds or term deposits - any small return at all would be massive to the equity holders.

[SailorRob]

Rymans float is humungous …heaps more than Oceania’s

Do Mav’s exercise on Ryman …wow wow wow …incredible


It's not about the size of the float.

It's the ratio of float to equity.

Instead of being a dork why don't you think carefully through what Mav has highlighted here and critique it properly?

Perhaps the takeaway could be that Ryman is the better investment - you'd have to do a bunch more work to figure that out, but yes they all have a similar model.

Daniel Gladis, one of the world's greatest investors, once told me there were two companies he followed in NZ, one of them was Ryman.

[ValueNZ]

It's not about the size of the float.

It's the ratio of float to equity.

Instead of being a dork why don't you think carefully through what Mav has highlighted here and critique it properly?

Perhaps the takeaway could be that Ryman is the better investment - you'd have to do a bunch more work to figure that out, but yes they all have a similar model.

Daniel Gladis, one of the world's greatest investors, once told me there were two companies he followed in NZ, one of them was Ryman.
And to add, it's the price you pay for that float and equity.

[SailorRob]

Why don't we all have a crack at valuing the hypothetical company as described by Mav above?

[SailorRob]

And to add, it's the price you pay for that float and equity.

Yes this is the most important part!

[ValueNZ]

No you assume too much, making an ass out of you.
What exactly is my assumption? I pointed out one of the flaws in your analogy, that Oceania charges a deferred management fee which is essentially rent but it's all received in advance.

Nah you've made an ass out of yourself.

[SailorRob]

So many on this thread are so bitter as they are deep in the red on their investment and that's all they can see. Wife in the ear as well I bet.

[Daytr]

So many on this thread are so bitter as they are deep in the red on their investment and that's all they can see. Wife in the ear as well I bet.

Thats actually quite funny. Re the wife I mean.

[X-men]

U all can say whatever fundamentals , NTA, bla bla bla....at the end....the market decides the SP .... N yes....69c

[Bjauck]

…

All of this is now pretty easy to work out, and the value is now in plain sight for anybody willing to do a bit of work.

While it's only been a week since reporting, the recent share price movements suggest the markets are getting it.


It looks the roller coaster has stopped yet….back down the SP goes.

[SailorRob]

Now I've tidied up all my work after reporting season, just for fun I thought I would see where OCA might roughly be, should it stop reinvesting in more land and developments, and just call it a day and finish their current pipeline.

Here's the parameters.
A. All values are at today's expenses and revenue rates.
B. No allowance for resales is included. I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.
C. Clearly, no new sales margins
D. Villages are all completed and sold down to normal occupancy rates over the next 8 years.
E. I don't know what corporate costs will be as many staff won't be needed. I have retained the current expense ratios for this exercise which will no doubt be too high.

So in about 8 years when all this is finished and sold what are we left with?

Underlying Profit should be around $71m ( to compare today's annual unpat with resales removed is $31m - but this obviously includes new sales profit).

To make the numbers real simple… 2032that's $10c EPS + inflation value. So again, because this concept is so important, the $.10c is ON TOP OF inflation.

Here's the kicker …2032 …OCA now has no debt and a $2.4B cash float !

If OCA were to achieve a return of 5% net on this free cash float that's $.20c EPS extra! Yep , 200% more than what they will be making on their properties.

The only 2 questions to ask;


What would you pay for a share making $0.30 EPS ( that is inflation indexed) ?
What kind of mega industry would want to buy this return and access to this source of cash the most?


You can love or hate Sailor as much as you like but he is the one correctly banging on about the “float” , trying to get people to see the ultimate real value of these companies.

He's right , these future numbers are incredible and have feck all to do with what nurses are paid.




I am astounded that this post has not generated any discussion or debate. Also disappointed nobody has had a crack at valuing this case as Mav asked and I seconded.

This is one of, if not the best post ever on OCA. It really forces one to view from a different angle and see the model for what it is, rather than obscured by cash flow timing.

This case is extremely conservative and assumes that they stop investing for growth, value creative growth I might add.

Well what is the company as hypothesised by Mav worth?

An inflation protected, steady, predictable and conservative flow of income of 30c a share, with visibility well into the future? Has to be worth at least 18 x.

So that would be $5.40 a share in 8 years... a CAGR of 30%.

But of course it won't play out like this, the numbers will be far better, perhaps obscured somewhat as they are now.

Why do we have this opportunity and potential world class CAGR?

Because the share price is LOW.

The very same reason you're all crying into your milk.

And in 8 years time, Arie will still be working. Why is that?

[Daytr]

Sounds like a desperate post.
Anyone who has invested in this stock in the last few years has lost their shirt.

That's not to say now that it's not a good investment as it has now lost so much value that it might do well in the future. I.e the price is looking attractive.

As said by many on on many occasions, entry key is critical.

We're you spurting the same value proposition when it was twice the price or more?

Anyhoo I think it does look relatively compelling now.

[bull....]

Now I've tidied up all my work after reporting season, just for fun I thought I would see where OCA might roughly be, should it stop reinvesting in more land and developments, and just call it a day and finish their current pipeline.

Here's the parameters.
A. All values are at today's expenses and revenue rates.
B. No allowance for resales is included. I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.
C. Clearly, no new sales margins
D. Villages are all completed and sold down to normal occupancy rates over the next 8 years.
E. I don't know what corporate costs will be as many staff won't be needed. I have retained the current expense ratios for this exercise which will no doubt be too high.

So in about 8 years when all this is finished and sold what are we left with?

Underlying Profit should be around $71m ( to compare today's annual unpat with resales removed is $31m - but this obviously includes new sales profit).

To make the numbers real simple… 2032that's $10c EPS + inflation value. So again, because this concept is so important, the $.10c is ON TOP OF inflation.

Here's the kicker …2032 …OCA now has no debt and a $2.4B cash float !

If OCA were to achieve a return of 5% net on this free cash float that's $.20c EPS extra! Yep , 200% more than what they will be making on their properties.

The only 2 questions to ask;


What would you pay for a share making $0.30 EPS ( that is inflation indexed) ?
What kind of mega industry would want to buy this return and access to this source of cash the most?


You can love or hate Sailor as much as you like but he is the one correctly banging on about the “float” , trying to get people to see the ultimate real value of these companies.

He's right , these future numbers are incredible and have feck all to do with what nurses are paid.



so your suggesting OCA should just cash up and exit the business as if they dont they will never have 2.4b cash float

[SailorRob]

so your suggesting OCA should just cash up and exit the business as if they dont they will never have 2.4b cash float


If they cash up and exit the business they will have no float.

For gods sake this is surely obvious?

This was not his point at all. We don't want a cash float.... we want a float invested at high rates of return and generating even more float....

He was just pointing out what could happen if they chose not to grow any more.

[Daytr]

100% correct.

About being the idiot that is.

You weren't talking about better off entry points... You were talking about people having lost their shirts.

Have fun staying poor.

No you just weren't perceptive enough to realise the obvious. I will be a lot wealthier by not ignoring the share price, or market cap.

Was it Charlie Monger that stated value has to be knowable or something along those lines?
Well the market obviously doesn't know it, otherwise the share price or I prefer market cap, oh yes that little number that actually values a company, would reflect it.

That's not to say the potential value isn't there but again the only way to realise this POTENTIAL value is through the share price.

You make out that this is pretty much a risk free trade. It isn't. Management are always capable of stuffing something up and then all you have done is doubled down on a dog.

[SailorRob]

No you just weren't perceptive enough to realise the obvious. I will be a lot wealthier by not ignoring the share price, or market cap.

Was it Charlie Monger that stated value has to be knowable or something along those lines?
Well the market obviously doesn't know it, otherwise the share price or I prefer market cap, oh yes that little number that actually values a company, would reflect it.

That's not to say the potential value isn't there but again the only way to realise this POTENTIAL value is through the share price.

You make out that this is pretty much a risk free trade. It isn't. Management are always capable of stuffing something up and then all you have done is doubled down on a dog.


I think you're talking about Charlie Munger?

Wrong, market cap does NOT value a company.

That is your job as an investor.

The ENTIRE POINT is that you NEVER take instruction from the market.

Occasionally the market - will give you opportunities to take advantage of but will NEVER provide you with a valuation.

Man you are an amateur.

[SailorRob]

No you just weren't perceptive enough to realise the obvious. I will be a lot wealthier by not ignoring the share price, or market cap.

Was it Charlie Monger that stated value has to be knowable or something along those lines?
Well the market obviously doesn't know it, otherwise the share price or I prefer market cap, oh yes that little number that actually values a company, would reflect it.

That's not to say the potential value isn't there but again the only way to realise this POTENTIAL value is through the share price.

You make out that this is pretty much a risk free trade. It isn't. Management are always capable of stuffing something up and then all you have done is doubled down on a dog.


Please explain ONE thing for me Day Trader

If as you say, the market cap values an company...

How can the value of all these businesses swing around by so much so often? How can the value of some of the biggest and strongest businesses in the world change by hundreds of percent in a year?

How can the value of Davita change by billions or nearly 50% in a few weeks?

Or is it that they DONT?

[SailorRob]

The entire point of all investing is that the market cap does not value the company.

The value is the the net future cash flows discounted to today.

You do NOT take instruction from Mr Market.

You take advantage of him.

[Daytr]

Please explain ONE thing for me Day Trader

If as you say, the market cap values an company...

How can the value of all these businesses swing around by so much so often? How can the value of some of the biggest and strongest businesses in the world change by hundreds of percent in a year?

How can the value of Davita change by billions or nearly 50% in a few weeks?

Or is it that they DONT?

Asked & answered already.
Learn to read.

[Daytr]

Asked & answered already.
Learn to read.

Well it was answered. Several of my responses to your questions from this morning have been deleted, which is curious.
Anyhoo not to worry, I'm not explaining the obvious yet again.

[Maverick]

so your suggesting OCA should just cash up and exit the business as if they dont they will never have 2.4b cash float

Good morning to ya Bull.
No , I haven't suggested anything, but yes, I do have an opinion.
What I am outlining is the hugely rewarding end game for OCA if they just work through their pipeline and call it quits.

My exercise illustrates that there is a huge pot of gold for OCA whenever they choose to stop the music.
It dispels the industry accepted myth “that RVs only make money because they build and rent stuff in a favourable property market “ …but it just ain’t true… stopping (by any operator) and letting the money wall wash in just hasn't been experienced in this ever expanding industry… yet

OCA is currently at a pivot point. They have run out of new territories to build villages vertically and still sell profitably.
In their HY result they demonstrate this by their slides of net returns on their new tower villages with “all cash in” .i.e that including the roads and community buildings.
If other operators did this they would actually be making losses. RYM and ARVs current capital issues are caused by this fact. (and then exacerbated as they moved into building apartments).
These OCA slides show the Hamilton building barely breaks even (3% profit) while the Spanky Auckland area makes a handsome 25%.

Market commenters have often congratulated OCA on recently switching focus from highrises to villas as they see apartments as financially inferior. But OCAs towers are actually very profitable when fully sold down; however, that's only in high end districts. Currently , there is simply nowhere else to build a new village of towers profitably.

OCA will no doubt keep expanding as opportunities arise. Ie They just bought 2 adjacent bits of land to villages . But, while brilliant purchases, these kind of volumes won't be enough to sustain their build rate.

OCA have many choices:
A.Switch to broard acre villas.(ie just replicate SUM who have this nailed)
B.Head to Aussy. You have to wonder why they bother keeping their AuSX listing going…mmm.
C.Casually add bits and pieces of high value land as they have recently done.
D.All of the above.
E.Stay ultra premium and boutique with what they currently have and just call it a day.(Yes, that's my preferred choice… plus a little bit of “C”.)

But what is pleasing is that whatever they choose, they are not compelled to expand nor addicted to just for expansion's sake.
The reality for them now is all they really have to do now is kick back, finish the pipeline and let all these chess pieces in place do their thing, they've already won if they do that.

[bull....]

Good morning to ya Bull.
No , I haven't suggested anything, but yes, I do have an opinion.
What I am outlining is the hugely rewarding end game for OCA if they just work through their pipeline and call it quits.

My exercise illustrates that there is a huge pot of gold for OCA whenever they choose to stop the music.
It dispels the industry accepted myth “that RVs only make money because they build and rent stuff in a favourable property market “ …but it just ain’t true… stopping (by any operator) and letting the money wall wash in just hasn't been experienced in this ever expanding industry… yet

OCA is currently at a pivot point. They have run out of new territories to build villages vertically and still sell profitably.
In their HY result they demonstrate this by their slides of net returns on their new tower villages with “all cash in” .i.e that including the roads and community buildings.
If other operators did this they would actually be making losses. RYM and ARVs current capital issues are caused by this fact. (and then exacerbated as they moved into building apartments).
These OCA slides show the Hamilton building barely breaks even (3% profit) while the Spanky Auckland area makes a handsome 25%.

Market commenters have often congratulated OCA on recently switching focus from highrises to villas as they see apartments as financially inferior. But OCAs towers are actually very profitable when fully sold down; however, that's only in high end districts. Currently , there is simply nowhere else to build a new village of towers profitably.

OCA will no doubt keep expanding as opportunities arise. Ie They just bought 2 adjacent bits of land to villages . But, while brilliant purchases, these kind of volumes won't be enough to sustain their build rate.

OCA have many choices:
A.Switch to broard acre villas.(ie just replicate SUM who have this nailed)
B.Head to Aussy. You have to wonder why they bother keeping their AuSX listing going…mmm.
C.Casually add bits and pieces of high value land as they have recently done.
D.All of the above.
E.Stay ultra premium and boutique with what they currently have and just call it a day.(Yes, that's my preferred choice… plus a little bit of “C”.)

But what is pleasing is that whatever they choose, they are not compelled to expand nor addicted to just for expansion's sake.
The reality for them now is all they really have to do now is kick back, finish the pipeline and let all these chess pieces in place do their thing, they've already won if they do that.

hey Mav , but wouldnt increasing costs eat into margins in a flat market. even oca

[Maverick]

hey Mav , but wouldnt increasing costs eat into margins in a flat market. even oca

My exersize is at today's prices.

But yes , in reality expenses will rise but they will all be offset by a similar increase of income:

The rise in care will be met by rises in WhataOra and PAC fees.
The rise in village operations will be met by the rise in village fees.
Interest costs will disappear and replaced by positive investment income
Corporate costs will reduce as OCA stops development.
New build costs ( and margins) will have ceased.
Resale margins will increase as per the inflation of the day which automatically adjusts the DMF income accordingly.

The only new cost that will be incurred is taxation.

This is the second biggest beauty of RV investing , that it is essentially inflation proof.

I hope this covers your question.

[SailorRob]

Well it was answered. Several of my responses to your questions from this morning have been deleted, which is curious.
Anyhoo not to worry, I'm not explaining the obvious yet again.

Hardly curious. If you have some self awareness you'll figure it out.

[Maverick]

And one last thing before I get on with real life leaving ST alone for a while.
(Posting does waste a lot of time and energy.)

Sailor, you asked my opinion on what this share might be worth if they do make say 30c p/a inflation indexed in 8 years...

I'd want 5% above inflation p/a . Thats for a no growth company that allows for some taxation.

That makes the share worth $6 to me. Just a little higher than your $5.50

Who might be interested in this company?
This is out of my lane and just my baseless opinion.
At today's price , It will be only of interest to to private equity only once its debt has been paid off ( so they can reload debt and resell it) but any mega pension fund could take an interest in this anytime.

As I've said, theres a ton of value here now sitting in plain site. Now sales, prices margins are all known and caresuites are derisked.

[Daytr]

Hardly curious. If you have some self awareness you'll figure it out.

I think you are the last person to talk about self awareness.

So, you ask questions, I answer the questions & you get them deleted and then ask the same question again.
Waste of space.

[SailorRob]

I think you are the last person to talk about self awareness.

So, you ask questions, I answer the questions & you get them deleted and then ask the same question again.
Waste of space.

I get them deleted? How do I do that exactly.

Until I got banned I didn't even know you could complain and I never even understood the rating system until others pointed out that mine was far better than yours.

[Daytr]

I get them deleted? How do I do that exactly.

Until I got banned I didn't even know you could complain and I never even understood the rating system until others pointed out that mine was far better than yours.

Fair enough, but I have never had posts deleted before so it's odd.

Good for you re your rating.
It's something I strive for everyday, have a great rating & beat SailorRob. It's all I dream about really, that glorious day. 🤣🙄

[SailorRob]

Great, got my whole order through at 68c. Thanks if it was one of you that sold to me.

[Daytr]

Great, got my whole order through at 68c. Thanks if it was one of you that sold to me.

Great entry level. 😉

[Baa_Baa]

Great, got my whole order through at 68c. Thanks if it was one of you that sold to me.

Were you in the 455K at 4pm or the 150k at closing? Lots of people jumping on the .68's today, 1.2m volume is 4x average daily volume. Wonder who would be selling at that lowly price. Pity them.

[winner69]

Great, got my whole order through at 68c. Thanks if it was one of you that sold to me.

Well done Rob ………for an order of that size that’s some effort

[thebusinessman]

How big is your OCA position, Sailor?

[SailorRob]

How big is your OCA position, Sailor?

Measured how?

[SailorRob]

Were you in the 455K at 4pm or the 150k at closing? Lots of people jumping on the .68's today, 1.2m volume is 4x average daily volume. Wonder who would be selling at that lowly price. Pity them.

I'm not sure. The contract came through at 17:07, so I guess on closing?

[ValueNZ]

Measured how?
% of your portfolio would be interesting to know.

[ValueNZ]

The entire point of all investing is that the market cap does not value the company.

The value is the the net future cash flows discounted to today.

You do NOT take instruction from Mr Market.

You take advantage of him.
Everyone should read chapter 8 of The Intelligent Investor.

[Baa_Baa]

I'm not sure. The contract came through at 17:07, so I guess on closing?

Probably, nice. I wonder who has shares in profit that would sell at 0.68, there weren't that many bought from the Covid lows that would suggest there are many profit takers left.

Market is a funny place, selling into a SP downtrend. I suppose we'll never know why people take loses on a capital investment that is in the long term almost certain to be successful, perhaps too focused on SP and less on investment potential?

Still, it's good buying and sentiment suggests this is a SP bottom or thereabouts, in the lower range of the twelve screens traders. Or maybe there's more distressed sellers to come who gift us an even lower SP?

[Baa_Baa]

% of your portfolio would be interesting to know.

Number of shares held also, might be in the top 20!

[ValueNZ]

You make out that this is pretty much a risk free trade. It isn't. Management are always capable of stuffing something up and then all you have done is doubled down on a dog.
More than enough margin of safety here at these prices. You could pay double or triple the current market price and you'd still probably do pretty well out of it.

[SailorRob]

Probably, nice. I wonder who has shares in profit that would sell at 0.68, there weren't that many bought from the Covid lows that would suggest there are many profit takers left.

Market is a funny place, selling into a SP downtrend. I suppose we'll never know why people take loses on a capital investment that is in the long term almost certain to be successful, perhaps too focused on SP and less on investment potential?

Still, it's good buying and sentiment suggests this is a SP bottom or thereabouts, in the lower range of the twelve screens traders. Or maybe there's more distressed sellers to come who gift us an even lower SP?

Who knows, but a friend joked with me that they'd be $2 by 2035.

Horrific prospect for most.

But.

That's over a 10% CAGR plus any dividends.

[ValueNZ]

I am astounded that this post has not generated any discussion or debate. Also disappointed nobody has had a crack at valuing this case as Mav asked and I seconded.

This is one of, if not the best post ever on OCA. It really forces one to view from a different angle and see the model for what it is, rather than obscured by cash flow timing.

This case is extremely conservative and assumes that they stop investing for growth, value creative growth I might add.

Well what is the company as hypothesised by Mav worth?

An inflation protected, steady, predictable and conservative flow of income of 30c a share, with visibility well into the future? Has to be worth at least 18 x.

So that would be $5.40 a share in 8 years... a CAGR of 30%.

But of course it won't play out like this, the numbers will be far better, perhaps obscured somewhat as they are now.

Why do we have this opportunity and potential world class CAGR?

Because the share price is LOW.

The very same reason you're all crying into your milk.

And in 8 years time, Arie will still be working. Why is that?
The idea of 30% CAGR makes me salivate. But still I'd prefer OCA to continue their development of property and grow their float at the highest rate possible, I'm not going anywhere for a long time.

[SailorRob]

% of your portfolio would be interesting to know.


Between 5 and 6%, which is ultimately a reflection of the incredible value out there now all over the place.

Basically if you put capital to work now you're gonna do very very well.

Bloomstran was saying recently his portfolio trades at an 11% yield and 82% of all earnings are reinvested at 15%... Do the math...

Only 3 times in 30 years has he had such high forward returns as now.

OCA position should probably be much bigger...

[Lego_Man]

May I ask what else is in your top conviction positions?

[SailorRob]

May I ask what else is in your top conviction positions?

Berkshire Hathaway at 30%, double digits in Markel and Occidental petroleum warrants, then Stellantis and Google.

These are percentages of total net worth, not just stock portfolio.

[bull....]

Berkshire Hathaway at 30%, double digits in Markel and Occidental petroleum warrants, then Stellantis and Google.

These are percentages of total net worth, not just stock portfolio.

obviously your portfolio return is double digits per yr otherwise you would just invest in the sp500 etf. right ?

[Daytr]

More than enough margin of safety here at these prices. You could pay double or triple the current market price and you'd still probably do pretty well out of it.

Or just buy 2 - 3 times as many shares for the same money at the current price.

Tying up your capital while it loses 60% in value and other stocks are making double didgit returns is not for me.
But each to their own.

[Daytr]

And one last thing before I get on with real life leaving ST alone for a while.
(Posting does waste a lot of time and energy.)

Sailor, you asked my opinion on what this share might be worth if they do make say 30c p/a inflation indexed in 8 years...

I'd want 5% above inflation p/a . Thats for a no growth company that allows for some taxation.

That makes the share worth $6 to me. Just a little higher than your $5.50

Who might be interested in this company?
This is out of my lane and just my baseless opinion.
At today's price , It will be only of interest to to private equity only once its debt has been paid off ( so they can reload debt and resell it) but any mega pension fund could take an interest in this anytime.

As I've said, theres a ton of value here now sitting in plain site. Now sales, prices margins are all known and caresuites are derisked.

Hi Maverick, when do you think the market will recognize the value you place on it I.e $6.
I. E roughly what time frame?
Thanks

[SailorRob]

Hi Maverick, when do you think the market will recognize the value you place on it I.e $6.
I. E roughly what time frame?
Thanks

I suggest you delete this post, have a read back through the thread and then go about your day.

We're not talking about a present value here Sport.

[SailorRob]

obviously your portfolio return is double digits per yr otherwise you would just invest in the sp500 etf. right ?

Yeah, it's been one hell of a run. I'd still be working like you and Day Trader had I invested in a SP500 etf.

[Daytr]

I suggest you delete this post, have a read back through the thread and then go about your day.

We're not talking about a present value here Sport.

I saw it 8 years.
Oh you finally got it.
Your valuation isn't the current value.

[SailorRob]

I saw it 8 years.
Oh you finally got it.
Your valuation isn't the current value.

It depends which one you're talking about. I presented 2. One was present value.

[ValueNZ]

Your valuation isn't the current value.
Yes that's the whole point. Intrinsic value is significantly higher than the market price.

Edit: my apologies just realised you were talking about the hypothetical company 8 years from the future and not about the difference between intrinsic value and market price.

[ValueNZ]

Or just buy 2 - 3 times as many shares for the same money at the current price.

Tying up your capital while it loses 60% in value and other stocks are making double didgit returns is not for me.
But each to their own.
Of course that's preferable, I'm just saying if someone were to pay a 2-3x higher price they would still probably beat any index over the long term.

Not that I would necessarily pay a 2-3x higher price. My average is 0.82c.

[Daytr]

Of course that's preferable, I'm just saying if someone were to pay a 2-3x higher price they would still probably beat any index over the long term.

Not that I would necessarily pay a 2-3x higher price. My average is 0.82c.

Yep that's my point.
I'm not disputing it looks like good buying.
It just wasn't at $1 or $1.50 no matter if one day you get your money back or more in the future or not.
Entry level is key. I'm not saying we can all bottom pick, however if you use the current market valuation I.e the market cap vs earnings as your basis for entry level as well as what the charts are saying then you are far less likely to get the entry point horribly wrong.

[ValueNZ]

How can the value of Davita change by billions or nearly 50% in a few weeks?
I'm sitting on 32% unrealised gains on my Davita position in one month, thanks SailorRob :t_up:

[SailorRob]

I'm sitting on 32% unrealised gains on my Davita position in one month, thanks SailorRob :t_up:


Your Stellantis will be looking pretty good as well.

[SailorRob]

It just wasn't at $1 or $1.50 no matter if one day you get your money back or more in the future or not.

Totally incorrect.

What happens subsequently does not change the fact of whether something was originally good buying...

If you can buy a dollar right now for 50c then it's good buying.

If you can buy that same dollar a week later for 25c IT DOES NOT mean the 50c purchase was bad buying.

Buying a dollar for 50c is ALWAYS good buying.

I will start charging you for these lessons.

[SailorRob]

as well as what the charts are saying


Hahahahaha

Good one mate

[Daytr]

Totally incorrect.

What happens subsequently does not change the fact of whether something was originally good buying...

If you can buy a dollar right now for 50c then it's good buying.

If you can buy that same dollar a week later for 25c IT DOES NOT mean the 50c purchase was bad buying.

Buying a dollar for 50c is ALWAYS good buying.

I will start charging you for these lessons.

Keep the comedy coming.
Left is right, up is down...
Your analogy is totally incorrect.
That dollar is worth a dollar now!
Not 8 years or whatever it will be in time.
Having gold in the ground is not the same as in the vault.

[ValueNZ]

Keep the comedy coming.
Left is right, up is down...
Your analogy is totally incorrect.
That dollar is worth a dollar now!
Not 8 years or whatever it will be in time.
Having gold in the ground is not the same as in the vault.
Obviously if you can buy a dollar of NPV for less than a dollar you're better off. Really basic stuff.

[Daytr]

Obviously if you can buy a dollar of NPV for less than a dollar you're better off. Really basic stuff.

So basic it didn't need stating.
Where did SailorRob say it was an NPV?
He said buy a dollar RIGHT NOW, not in the future.
The intrinsic value that is perceived is not realizable now, only the share price is.

[SailorRob]

Keep the comedy coming.
Left is right, up is down...
Your analogy is totally incorrect.
That dollar is worth a dollar now!
Not 8 years or whatever it will be in time.
Having gold in the ground is not the same as in the vault.


Finally we agree on something

So... Buying it at 50c is... GOOD BUYING

[bull....]

Finally we agree on something

So... Buying it at 50c is... GOOD BUYING

just like any investment your just making a guess its good buying as you dont know the future

[winner69]

Finally we agree on something

So... Buying it at 50c is... GOOD BUYING

I’d buy OCA at 50c ….that’ll be GOOD BUYING

[SailorRob]

just like any investment your just making a guess its good buying as you dont know the future



Totally wrong.

Investing is not about guessing.

That is 12 screen gambling you're talking about.

Investing is an operation is one which, on thorough analysis, promises safety of principal and a satisfactory return.

[SailorRob]

I’d buy OCA at 50c ….that’ll be GOOD BUYING


I bought 20% lower than that!

Was good buying as was buying at $1.50 (I never have).

[bull....]

Totally wrong.

Investing is not about guessing.

That is 12 screen gambling you're talking about.

Investing is an operation is one which, on thorough analysis, promises safety of principal and a satisfactory return.




lol so your saying cashflow is never affected by anything at all.

[Daytr]

Finally we agree on something

So... Buying it at 50c is... GOOD BUYING

Nope because you can't deliver your $1 now.
What do I get a promissory note? 🤣

[Daytr]

I'm sitting on 32% unrealised gains on my Davita position in one month, thanks SailorRob :t_up:


Your Stellantis will be looking pretty good as well.

I love the fact that the share price only seems to matter when your stocks are going up. 🤣

Good buying by the way.

[SailorRob]

I love the fact that the share price only seems to matter when your stocks are going up. 藍

Good buying by the way.


The truth is that both of us would rather they had gone down, and by a lot.

I would like to add to both my positions.

And I would like it more if I owned both companies outright and for free.

[SailorRob]

I love the fact that the share price only seems to matter when your stocks are going up. 藍

Good buying by the way.


Thanks, but this is the whole point I am making, it's not good buying because the share prices have rallied a lot in a short time.

It was good buying because it was a purchase which, on thorough analysis, promises safety of principal and a satisfactory return.

The short term price action does not determine whether it was good buying or not.

[Daytr]

I'm sitting on 32% unrealised gains on my Davita position in one month, thanks SailorRob :t_up:


Your Stellantis will be looking pretty good as well.


Thanks, but this is the whole point I am making, it's not good buying because the share prices have rallied a lot in a short time.

It was good buying because it was a purchase which, on thorough analysis, promises safety of principal and a satisfactory return.

The short term price action does not determine whether it was good buying or not.

I never said it was.
But the quicker the market realises value the better.
I.e it would be nice if the market realised your valuation right now in OCA. That money could then be realised & invested elsewhere.

[SailorRob]

I never said it was.
But the quicker the market realises value the better.
I.e it would be nice if the market realised your valuation right now in OCA. That money could then be realised & invested elsewhere.

No.

Me and Warren Buffett think exactly the opposite to this.

The slower the better.

[SailorRob]

I never said it was.
But the quicker the market realises value the better.
I.e it would be nice if the market realised your valuation right now in OCA. That money could then be realised & invested elsewhere.

I don't want the OCA share price to move until at least 2040.

Well not move up anyway.

[SailorRob]

I never said it was.
But the quicker the market realises value the better.
I.e it would be nice if the market realised your valuation right now in OCA. That money could then be realised & invested elsewhere.

I don't disagree with your strategy though, it can work. Just not for me.

[Daytr]

I don't want the OCA share price to move until at least 2040.

Well not move up anyway.

Good for you.

[Joshuatree]

just like any investment your just making a guess its good buying as you dont know the future


I guess it's possible the models may change due to Govt or even not for profit ( hard to imagine atm I know)RV's make a comeback !

[thebusinessman]

Measured how?

Number of shares and % of portfolio would give me a good idea of just how confident you are in this stock.

I have 50k and that's 2.7%, am considering doubling the position. If you're willing to share I'd have another little piece of data to consider ie. what the most bullish are allocating vs me, a diversified optimist.

[Lego_Man]

I don't want the OCA share price to move until at least 2040.

Well not move up anyway.

Surely you're taking the piss now :D

[Daytr]

Surely you're taking the piss now :D

Don't get him restarted!
I think SailorRob should move into prescription drugs as he has the most effective sedative ever known.

[bull....]

Surely you're taking the piss now :D

he's going to live to 150 lol. anyway i dont know why anyone would invest in a no div company on the hope in 40 yrs your make ****load's of money.

[SailorRob]

Surely you're taking the piss now :D

Not at all. I have posted the math in great detail before, I can find it for you.

The longer the share price stays lower while the business improves, the dramatically more money I'll make in the long term.

If I can buy assets for 25c on the dollar, the longer I can do it for the better.

[SailorRob]

Number of shares and % of portfolio would give me a good idea of just how confident you are in this stock.

I have 50k and that's 2.7%, am considering doubling the position. If you're willing to share I'd have another little piece of data to consider ie. what the most bullish are allocating vs me, a diversified optimist.

The only thing that is relevant is the percentage of total net worth.

If you have 100% of your portfolio in OCA but your stock portfolio is small in comparison to net worth then it's meaningless.

If you have 10k worth of OCA and your net worth is 2k then it's massive.

For me 5 to 6% is a larger but not massive position, I'd be comfortable with more but don't want to sell other stuff.

What else is relevant is what's the other 97% of your net worth invested in? What's the opportunity cost, and what's your estimated forward returns on other stuff?

[SailorRob]

Number of shares and % of portfolio would give me a good idea of just how confident you are in this stock.

I have 50k and that's 2.7%, am considering doubling the position. If you're willing to share I'd have another little piece of data to consider ie. what the most bullish are allocating vs me, a diversified optimist.

Also unless you know my track record, I wouldn't go using the data I provide as anything to go by!

[bull....]

Also unless you know my track record, I wouldn't go using the data I provide as anything to go by!

cause we dont know your track record. you ask everyone else but fail to disclose yours and expect everyone to believe your miralce system.

[Joshuatree]

I guess it's possible the models may change due to Govt or even not for profit ( hard to imagine atm I know)RV's make a comeback !

For example , this posted by nztx Change being demanded

"https://www.nzherald.co.nz/business/...MXVI5HEEBIQNI/

Christchurch Metlifecare retirement village resident complains of $285,000 charge to transfer apartments


Not good when this sort of thing gets full airing"

[Rawz]

For example , this posted by nztx Change being demanded

"https://www.nzherald.co.nz/business/...MXVI5HEEBIQNI/

Christchurch Metlifecare retirement village resident complains of $285,000 charge to transfer apartments


Not good when this sort of thing gets full airing"

yes that's rough. internal transfer must be a way to do it better than charge everything at current rates

[Daytr]

yes that's rough. internal transfer must be a way to do it better than charge everything at current rates

That's how they work. You sell your apartment back typically without the capital gain and ony get 75% of that historic value.
A lot residents transfer from a unit to a care facility within the same village and would pay similar.

This is adds to the float that SailorRob has been banging on about, as they will more than likely sell it at a higher price I.e current market price and kept 80% of the 25% after refurbishment costs.

[SailorRob]

cause we dont know your track record. you ask everyone else but fail to disclose yours and expect everyone to believe your miralce system.

The great miracle system that was first outlined in 1934!

Must be magic.

Like being able to make money off any chart anywhere anytime.

[SailorRob]

But you are right it is a miracle being able to purchase shares of future cash flows conservativly estimated at having a present value of over $2.50 for 68 cents.

[bull....]

The great miracle system that was first outlined in 1934!

Must be magic.

Like being able to make money off any chart anywhere anytime.

haha the playbook that is magic. thats why everyone's still working eh

[SailorRob]

haha the playbook that is magic. thats why everyone's still working eh

Well, you retired 20 years ago to trade stocks. So the story goes.

[bull....]

Well, you retired 20 years ago to trade stocks. So the story goes.

no i didnt retire 20yrs ago. i left full time work to trade full time. im still not even at retirement age. anyway the fact is there is no magic formula otherwise no one would work.
you say you know buffett inside out but you are still guessing his magic just like me and everyone else otherwise no one would be working.

[SailorRob]

no i didnt retire 20yrs ago. i left full time work to trade full time. im still not even at retirement age. anyway the fact is there is no magic formula otherwise no one would work.
you say you know buffett inside out but you are still guessing his magic just like me and everyone else otherwise no one would be working.

Are you proposing that I am suggesting there is a system that can create all the goods and services the world consumes without any human input?

I don't need to guess anything... I just buy Berkshire.

[thebusinessman]

The only thing that is relevant is the percentage of total net worth.

If you have 100% of your portfolio in OCA but your stock portfolio is small in comparison to net worth then it's meaningless.

If you have 10k worth of OCA and your net worth is 2k then it's massive.

For me 5 to 6% is a larger but not massive position, I'd be comfortable with more but don't want to sell other stuff.

What else is relevant is what's the other 97% of your net worth invested in? What's the opportunity cost, and what's your estimated forward returns on other stuff?

That's a lot of words to not fully answer the question.

So you have 5 to 6% of total net worth in OCA? How many shares? PM me if you'd rather not disclose to the public, I am genuine in my curiosity as I consider my future position here.

[SailorRob]

That's a lot of words to not fully answer the question.

So you have 5 to 6% of total net worth in OCA? How many shares? PM me if you'd rather not disclose to the public, I am genuine in my curiosity as I consider my future position here.

Yes 5 to 6% of net worth.

[thebusinessman]

Yes 5 to 6% of net worth.

This helpful to know if your net worth is 10m, not so helpful if it's 100k. PM me if you don't mind.

[Rawz]

This helpful to know if your net worth is 10m, not so helpful if it's 100k. PM me if you don't mind.

why does it matter..? his conviction obviously is not high if only 5-6% position.

[RTM]

why does it matter..? his conviction obviously is not high if only 5-6% position.

We are about 3.7% of our NZ/OZ portfolio. And for me that is a pretty high conviction stock. If the price drops to say 50c,will in all probability buy more. Perhaps to take portfolio to 4-5%.
For what it’s worth !

[RTM]

why does it matter..? his conviction obviously is not high if only 5-6% position.


….of Net Worth Rawz….sounds significant to me.

[ValueNZ]

I have 75% of my NW invested in OCA :t_up:

Wouldn't necessarily recommend it for all, I'm working with peanuts compared to the rest of you.

[Rawz]

I have 75% of my NW invested in OCA :t_up:

Wouldn't necessarily recommend it for all, I'm working with peanuts compared to the rest of you.

NOW THATS CONVICTION. :eek2:

[Baa_Baa]

ANZ ups their stake (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/423049/409032.pdf) by another 7.5 million shares to total 70.68 million, 9.76% of shares on issue.

[winner69]

anz ups their stake (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/oca/423049/409032.pdf) by another 7.5 million shares to total 70.68 million, 9.76% of shares on issue.

now that’s conviction

[Balance]

ANZ ups their stake (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/423049/409032.pdf) by another 7.5 million shares to total 70.68 million, 9.76% of shares on issue.

Same ANZ which kept upping their stake in PEB? :eek2:

[ValueNZ]

But you are right it is a miracle being able to purchase shares of future cash flows conservativly estimated at having a present value of over $2.50 for 68 cents.
Out of curiosity what discount rate do you use to estimate your present value of ~$2.50. Would it be possible for you to share any calculations you may have done in the past to calculate that NPV?

Cheers.

[SailorRob]

Out of curiosity what discount rate do you use to estimate your present value of ~$2.50. Would it be possible for you to share any calculations you may have done in the past to calculate that NPV?

Cheers.


10%. I like to keep it very simple, the only time I use DCF's is when I need to prove how unrealistic it is that a company will grow into its price. I used this logic to sell my Mader position for $4.80 before it went to $8... But. Process vs Outcome...

Really you're doing DCF's in your head all the time but they're so simple that it's just automatic.

So take the numbers Mav and I were discussing for 8 years out and discount them to the present using a 10% rate.

Often I'll just do a cap rate calculation on an earnings number, so for a House in the burbs as an 'investment' rent = $600/week, net margin 50%, (52*300) / 8% = $195,000. So if you want an 8% return that's what you pay. Any higher return than that requires someone willing to get a lower than 8% return buying it off you, or you skimping on maintenance and finding someone willing to overlook etc.. All the immigration and construction costs in the world cannot change this calculation (unless rent rises).

So if you use a term deposit rate as your discount and assume declining rates, you can get to a FAR higher present value for OCA but we like to be very conservative such that there is a very low chance what you are assuming does not occur.

[SailorRob]

ANZ ups their stake (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/423049/409032.pdf) by another 7.5 million shares to total 70.68 million, 9.76% of shares on issue.


What's the story here BaaBaa, this isn't their custodian service, so it's the investment arm? Is this holding on behalf of the bank itself?

[Baa_Baa]

What's the story here BaaBaa, this isn't their custodian service, so it's the investment arm? Is this holding on behalf of the bank itself?

Can't say I know the details but the bulk of their holding is through the investment arm, ANZ New Zealand Investments Limited (https://www.anz.co.nz/personal/investing-kiwisaver/investment-funds/) 9.5% whereas ANZ Bank New Zealand Limited 0.24% and also ANZ Custodial Services New Zealand Limited 0.24% are small beer by comparison, albeit 3.4m shares between them.

Just says to me that a big insto sees, and is probably promoting, value for their investors at these currently discounted share prices.

[SailorRob]

This helpful to know if your net worth is 10m, not so helpful if it's 100k. PM me if you don't mind.


Well, not really. It would depend on my age and how I got the money as well.

If I was 18 and net worth was 100k from investing saved cash from a part time job then it would have more relevance than if I was 60 and had inherited 15 million and lost 5 trading 12 Screens to leave me with a 10 million net worth.

I get your point but there's a lot of nuance. For what it's worth my net worth is North of yours and purely from saving and investing.

I honestly would take no notice at all of my position in OCA just focus on what I write up about the opportunity and see if you agree or not with it.

What you should be doing in order to help make your decision is following what Bull*$!^ calls the Magic Formula TM.


- Read the IPO document in its entirety and see if the original plans and model have changed and if they have achieved what they set out in the IPO

- Study the insiders, particularly the directors and their financial involvement (this is where their position size to net worth really matters)

- Put together all of the financial statements since the IPO into your own spreadsheet so you have all the data from all 3 statements for each year in one place. See how the numbers flow around and make sure you're happy with what's happening. How are the assets growing and how do they produce earnings. Are there any hidden assets or liabilities?

- Understand the business model and the balance sheet/funding model (critical)

- Study the industry and the competitors, look at the numbers from SUM and the other at more mature stages.

- Visit a couple of locations and talk to residents/staff

- Read a few annual reports, from the back to the front. Study the footnotes carefully.

- Try and look at how the capital moves in the business, how much capital is required and where is it from

- Study closely how earnings are produced and estimate what they will be in future and how durable they are, understand the difference between cash and 'earnings' and how they measure and report underlying earnings.

- Create your own spreadsheets for numbers of staff, residents, various units/building etc since IPO and look at pro IPO information

- Get your head around the development margins - how are they measured and realised

- Understand the accounting particularly of depreciation and what is expensed.

This is a bare minimum before taking a position, let alone 5%.

Or you could look at a chart on a screen from its 'look' decide what's going to happen next.

[SailorRob]

Can't say I know the details but the bulk of their holding is through the investment arm, ANZ New Zealand Investments Limited (https://www.anz.co.nz/personal/investing-kiwisaver/investment-funds/) 9.5% whereas ANZ Bank New Zealand Limited 0.24% and also ANZ Custodial Services New Zealand Limited 0.24% are small beer by comparison, albeit 3.4m shares between them.

Just says to me that a big insto sees, and is probably promoting, value for their investors at these currently discounted share prices.


ANZ Wholesale Trans-Tasman Property Securities Fund has about 3% and ANZ Wholesale Australasian Share Fund about 1.3% of share outstanding.

[Ferg]

If anyone wants to get their head around not just the cash impact of the float, but also the P&L impact of that same float I recommend you pull a handful of annual reports, and then examine and compare the values sitting in the following accounts across the years:

Balance Sheet: deferred management fees ($45m) & Refundable ORAs $879m (p35 of 2023 AR)
P&L notes: management fee income (note 2.2 p46)
Note 3.4: gross versus nett ORAs on p57 - in particular the deductions of $191m & $34m in FY23.

The life cycle of the ORA is 100% is banked and recorded as a gross liability per note 3.4 (and the cash flow report) => 30% is eventually deducted from gross ORA (also per note 3.4), but the offsetting entry for the deduction ends up in deferred management fees on the liability side of the Balance Sheet ($45m as at FY23) => this balance sheet DMF value then gets released to the P&L as income per note 2.2 and finally upon departure of the resident the balance of the ORA float is repaid (less any other fees receivable from the departing resident - per the cash flow report).

Four things:


If you track the numbers through the years you will see relationships between the various DMF numbers (being the deduction from gross, the DMF liability and DMF income) year on year such that forecasting next years DMF contribution to income is relatively trivial.
The $45m of DMF on the Balance Sheet is not a liability, rather it is unearned income.
There is measurable relationship between sales+resales values and the gross float received each year.
The balance of unearned DMF of $45m represents the accumulated difference between the method by which management fees are charged (e.g. 10/10/10 for ILUs) versus how they are released to the P&L (which is over the expected tenure of the client).


DMF income has a snowball effect assuming there are no fundamental changes to 1) contracts, 2) life expectancy, and 3) the accounting policies, and assuming sale prices continue to increase (on average) over time, and that demand exists for the inventory that is constantly turning over. Keep in mind a resale can be up to 7 years later for a villa, or more.

Meanwhile, as SR has pointed out repeatedly, the entire gross ORA has been available to OCA the entire time at zero interest cost to fund whatever OCA wants. Also keep in mind that it is never actually repaid by OCA - the repayment is effectively funded by the incoming resident (plus some more cash). And as Maverick has pointed out, once the pipeline of development slows or stops, this is a cash generating machine much like any other RV.

[winner69]

Ryman in their attempt to show Cash Flow from existing operations v development flows breaks Investing Cash Flows into existing and new developments

Like they say Capex on Existing Villages and Head Office is $47m …New Villages $396m

Does Oceania have a Capex on Existing Villages number?

[Ferg]

Does Oceania have a Capex on Existing Villages number?

I think this is the split of capex per the cashflow. FY23 $55m on PPE, and $103m on developments. Note 3.2 shows the $55m as capex (excluding capitalised interest and ignoring for now the $1.5m transfer ex development). Note 3.1 has $92.8m + $5.4m = $98m (also ignoring the $1.5m transfer noted previously). Difference between $103m and $98m is likely due to capex accruals. I haven't checked this but I'm guessing refurbishment costs for departing residents are part of the $55m

I think I can see where you are heading with this....go for it! But don't do what Craigs do and only work with half the numbers. Their analysis on this particular aspect is cack.

Reminds me of the first rule of asking a question in business: you should already know the answer....

[RTM]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/423119/409149.pdf

Liz obviously listening to Mav, SR etc.

[winner69]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/423119/409149.pdf

Liz obviously listening to Mav, SR etc.

Liz’s average buy price over the years is still just over $1.03 ……but she knows it’ll be worth while when share price gets to 4 bucks ..or was it 10 bucks

[forest]

Can't have to many, Liz is a believer in this.

[allfromacell]

Can't believe she didn't purchase enough to get a nice round number, owning 1,999,403 v a clean 2M would drive me insane.

[nztx]

Can't believe she didn't purchase enough to get a nice round number, owning 1,999,403 v a clean 2M would drive me insane.


Probably forgot to gross up & add the brokerage :)

[SailorRob]

Liz’s average buy price over the years is still just over $1.03 ……but she knows it’ll be worth while when share price gets to 4 bucks ..or was it 10 bucks

Such a massive cry baby. If you don't like then sell and p1ss off.

[davflaws]

Such a massive cry baby. If you don't like then sell and p1ss off.

I really value your contribution and analysis, but I have noticed that lately some of your posts are verging on abusive.

It would be good if we could all keep our communications on specific shares polite and respectful. There is plenty of vitriol and abuse (more than I want) on the other forums on this site

[SailorRob]

I really value your contribution and analysis, but I have noticed that lately some of your posts are verging on abusive.

It would be good if we could all keep our communications on specific shares polite and respectful. There is plenty of vitriol and abuse (more than I want) on the other forums on this site

Fair point but gets old when winner just whinges that the share price isn't higher and replies with snarky comments to mavs supurb analysis.

He is obviously way underwater and doesn't understand the business or why it's currently undervalued so just posts snarky rubbish instead of challenging ideas or providing analysis.

But point taken I don't disagree.

[SailorRob]

Liz’s average buy price over the years is still just over $1.03 ……but she knows it’ll be worth while when share price gets to 4 bucks ..or was it 10 bucks


Instead of snarky comments, please provide detailed analysis on why you do not think the share price will be significantly higher in future and why you think Liz is wrong to have paid an average of $1.03.

Thanks in advance.

[bull....]

My exersize is at today's prices.

But yes , in reality expenses will rise but they will all be offset by a similar increase of income:

The rise in care will be met by rises in WhataOra and PAC fees.
The rise in village operations will be met by the rise in village fees.
Interest costs will disappear and replaced by positive investment income
Corporate costs will reduce as OCA stops development.
New build costs ( and margins) will have ceased.
Resale margins will increase as per the inflation of the day which automatically adjusts the DMF income accordingly.

The only new cost that will be incurred is taxation.

This is the second biggest beauty of RV investing , that it is essentially inflation proof.

I hope this covers your question.

hey Mav agree with some of your thought's not all though.

corp costs may come down while they stop building eg the recent hire might sack some people.
rise in care may not keep pace with inflation in the long run im picking
rise in fee's may be offset as joshua alluded to in changes to the act which im picking
building costs will continue to increase faster than property prices will at least in the fore-seeable future further putting development margins under pressure.

anyway i guess i differ from you and ferg and sr on the float being like bullet proof. as like insurance company floats you can lose if you make mistakes.

[winner69]

Instead of snarky comments, please provide detailed analysis on why you do not think the share price will be significantly higher in future and why you think Liz is wrong to have paid an average of $1.03.

Thanks in advance.

I did not say or imply Liz was wrong ….you said that not me

And you wrong in assuming I’m ‘way underwater’

[SailorRob]

I did not say or imply Liz was wrong ….you said that not me

And you wrong in assuming I’m ‘way underwater’

Also assuming the sun will rise tomorrow.

[Maverick]

hey Mav agree with some of your thought's not all though.

corp costs may come down while they stop building eg the recent hire might sack some people.
rise in care may not keep pace with inflation in the long run im picking
rise in fee's may be offset as joshua alluded to in changes to the act which im picking
building costs will continue to increase faster than property prices will at least in the fore-seeable future further putting development margins under pressure.

anyway i guess i differ from you and ferg and sr on the float being like bullet proof. as like insurance company floats you can lose if you make mistakes.
Cheers for the response Bull, I appreciate any pushback if it's considered like yours here.

My exercise was very simplistic, only to paint a very rough sketch of what should be at the end of the rainbow using current values/conditions. That's if they simply finish their pipeline and go fishing.
In reality , we will never know as OCA are surely just going to keep adding more stuff as opportunities arise. That's their job.

With RYM and ARV ( to a lesser extent) going through a cash squeeze and now the analysts focus is almost entirely on RVs cashflow and bank covenants. As a result , The whole industry kinda feels a bit terminal and doomed going by Q&A time at the meetings and any analysis write ups lately. Debt levels...neg cashflow...selling stuff ...years of cut dividends. It begs the question: is it actually viable in the long run and is it worth the trouble? Hence inspiring the theoretical exercise to end game.

There will be plenty of new and unknown shocks/ crises between now and 8 years away. All your points could all come true and then some. You and I can't know but this is just a best guess sketch to quantify the likely reward might be by using today's known parameters. That's all the tools we've got to use.

But from this , it is clear enough that there is a massive pot of gold in line that is worthy of navigating the drama of the last 5 years and who knows what risks to come.

SR talks of a CAGR of 8 years of 30% from here to 2032. That's as massive as it is realistic for someone getting in now.

But Liz`s, Greg t and me , our CAGR will be way less. Under this exercise I figure about 15% CAGR 2032 . That's at an earlier and higher entry point than today. So for us who got in too soon , the reward should in theory still be up 600%.

To my knowledge no one has ever sold any. While I cannot speak for them, the logic surely is that they too see reward ahead despite the variables and unknowns.

The point of me putting down the potential rewards specifically like this is to demonstrate there is just loads and loads of margin of safety for all of us , whenever we got on the bus, for any variables and dramas that pop up over the years.

[Bjauck]

Can't have to many, Liz is a believer in this.
It must have been too tempting not to buy another small parcel @ 70c.

[Leemsip]

As per the others, thanks Mav.
My thinking wasnt complex enough to think of the build and cashflow timings of the different companies and how this impacts debt and returns. Complex industry to get your head around...

[winner69]

Same ANZ which kept upping their stake in PEB? :eek2:

I note ANZ bought even more PEB last week or so

[Baa_Baa]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

[SailorRob]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

Excellent analysis, I can't disagree with anything there.

[Rawz]

Good post BaaBaa...

[RupertBear]

Yes excellent post Baa Baa

[iamaskier]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

Good post. I think that's a fair summation of the current situation. I suppose those invested have done so in anticipation of EPS growth. For those who have run out of patience, OCA clearly hasn't shown enough of this. I suppose it's up to the individual as to whether one thinks the reasons for a flat EPS (well documented by some great contributors here) are valid and, more importantly, whether that should temper expectations of the future. Clearly there are folks in both camps, though I do think it's significant that the people closest are invested and continue to invest.

[SailorRob]

Good post. I think that's a fair summation of the current situation. I suppose those invested have done so in anticipation of EPS growth. For those who have run out of patience, OCA clearly hasn't shown enough of this. I suppose it's up to the individual as to whether one thinks the reasons for a flat EPS (well documented by some great contributors here) are valid and, more importantly, whether that should temper expectations of the future. Clearly there are folks in both camps, though I do think it's significant that the people closest are invested and continue to invest.

Well said, also the people who are the closest and can pull the strings/have some control as well as vast experience and business acumen.

Was a great point by Mav that those entering now have a vastly different potential CAGR than he does (or the insiders) who understand it more than most anyone.

[ronaldson]

Everybody knows that OCA is pivoting away from resthome beds to "village units" which encompasses both apartments and villas.

I did a comparison between the situation at 31 March 2023 (end of FY23) and 30 september 2023 (HY24). OCA has shed 255 resthome beds and 4 care suites in that period, while "banking" a further 67 village units.

The release of resthome beds was achieved by not extending the leases at Everill Orr (52) and Wesley (51) in Auckland and selling Greenvalley lodge (50) and Amberwood (67) on the North Shore and in Waitakere respectively, and by closing Otumarama (32 plus 7 care suites) in Nelson. 3 resthome beds at Elsdon in Paraparaumu were repurposed to care suites.

The Interim Report indicates there are 7 further sites "held for sale" with one of those under contract. We can expect those unnamed facilities to be among the remaining ones that are exclusively care beds, and there happen to be exactly 7 of those, but it is possible one or two others which have a small number of care suites in addition might be included in those "on the block" if some of the others in that category have some limited development potential.

Given care beds operated reduced from 1651 to 1396 over that period there will still be a lot of care beds in the portfolio even if the 7 intended sales/disposals are achieved, but we can clearly infer OCA is exiting traditional resthome facilities. They may not be unprofitable at current bed subsidy levels but they will not make an acceptable return on capital and are dependant upon government support to residents which is ungenerous at best and lacks commitment when the national economic circumstance is constrained.

These steps are incrementally good for investors in the longer term but a canary in the mine as to how aged care will be in future.

[Bjauck]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors. Term deposits do pay out approx. 6% which is subject to tax up to a marginal rate of 39% so you are going backwards after inflation.

So an investment in a company at half its NTA (even if you think it is an optimist NTA) with (untaxed) capital growth potential is a worthwhile consideration. However as you say if you cannot wait a long time and/or need income then a TD does provide a good income interest return in these inflationary times. Moreover, despite the degradation in the real value of your investment, with your taxes you can help subsidise those on benefits or those who do get untaxed capital gains.

[SailorRob]

Term deposits do pay out approx. 6% which is subject to tax up to a marginal rate of 39% so you are going backwards after inflation.

So an investment in a company at half its NTA (even if you think it is an optimist NTA) with (untaxed) capital growth potential is a worthwhile consideration. However as you say if you cannot wait a long time and/or need income then a TD does provide a good income interest return in these inflationary times. Moreover, despite the degradation in the real value of your investment, with your taxes you can help subsidise those on benefits or those who do get untaxed capital gains.

It's not only not an optimistic NTA, it's completely wrong. It's actually a quarter of NTA.

[Lego_Man]

Top performer in the NZX50 today - the worm has turned? Hopefully the parcel i just picked up at 70c will be my cheapest.

[SailorRob]

Top performer in the NZX50 today - the worm has turned? Hopefully the parcel i just picked up at 70c will be my cheapest.

Hopefully my supermarket shop today will be my cheapest.

I hope all my shopping in future will be more expensive.

What the actual...

Nowt as queer as folk.

Literally hoping they will have to pay MORE for something in future.

INSANITY.

[ValueNZ]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

Thank God for the irrationality of the market and the "short termism" you correctly point out. If not for that, we wouldn't have the opportunity to buy OCA in the 70c range!

As for the time horizon I agree it could take as long as you say but I seriously doubt it would be longer than a few years if the balance sheet continues compounding as it's done in the past. But buying into OCA (or pretty much generally equities) you really should have a minimum of a 10 year time horizon.

[ValueNZ]

"The holder of marketable shares actually has a double status, and with it the privilege of taking advantage of either at his choice. On one hand his position is analogous to that of a minority shareholder or silent partner in a private business. Here his results are entirely dependent on the profits of the enterprise or on a change in the underlying value of its assets. He would usually determine his share of the net worth as shown in the most recent balance sheet. On the other hand, the common stock investor holds a piece of paper, which can be sold in a matter of minutes at a price which varies from moment to moment - when the market is open, that is- and often is far removed from the balance sheet value"

I urge all shareholders of OCA to view their position as a minority shareholding in a wonderful business - not as someone who holds a piece of paper that seems to be falling in price month after month. The current price quotation by the market should be ignored, expect if you intend on buying more. If you as a shareholder allow yourself to be worried about the declining share price you transform your advantage of holding a marketable security into a disadvantage.

[Bjauck]

Hopefully my supermarket shop today will be my cheapest.

I hope all my shopping in future will be more expensive.

What the actual...

Nowt as queer as folk.

Literally hoping they will have to pay MORE for something in future.

INSANITY.
I guess you expect to have a bigger capital outlay in the future than what you have already spent in the past at higher prices. If you are already fully invested and are already retired, then you surely will want your portfolio valuation to increase.

[SailorRob]

"The holder of marketable shares actually has a double status, and with it the privilege of taking advantage of either at his choice. On one hand his position is analogous to that of a minority shareholder or silent partner in a private business. Here his results are entirely dependent on the profits of the enterprise or on a change in the underlying value of its assets. He would usually determine his share of the net worth as shown in the most recent balance sheet. On the other hand, the common stock investor holds a piece of paper, which can be sold in a matter of minutes at a price which varies from moment to moment - when the market is open, that is- and often is far removed from the balance sheet value"

I urge all shareholders of OCA to view their position as a minority shareholding in a wonderful business - not as someone who holds a piece of paper that seems to be falling in price month after month. The current price quotation by the market should be ignored, expect if you intend on buying more. If you as a shareholder allow yourself to be worried about the declining share price you transform your advantage of holding a marketable security into a disadvantage.


Well said.

You're on a hell of a run, PARA, Stellantis, Davita... Everything you touch turns to Gold.

If only you had more capital!

[SailorRob]

I guess you expect to have a bigger capital outlay in the future than what you have already spent in the past at higher prices. If you are already fully invested and are already retired, then you surely will want your portfolio valuation to increase.


That depends, if the forward returns are going to be 30% CAGR for some time as we have discussed (that is of course an 'if') then I don't want lower rates.

If I had a term deposit I would not be praying for its interest rate to fall.

The way I read their post, the implication was they intended to buy more, but perhaps this was not the meaning.

So let's say we knew the share price was going to be $6 in 8 years time and we were retired, we would want to be finding ways to put more capital in at low prices, which may be difficult but trust me you would find a way.

[winner69]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

That’s a great post BaaBaa ……love it when you do deep thinking

Remember me saying Oceania are a bit like the NZ Warriors …..and how it’s going to be ‘it’s our year’ ….year in year out

Paraphrasing you one could say ‘Warriors are a dud team until they start winning silverware for their fans’

However seems that the Warriors are destined never to win the championship …likewise Oceania might be destined to be a perennial disappointment.

As Bob Marley said ‘In this bright future you can’t forget your past’ so let’s keep hoping destiny is on our side

[SailorRob]

That’s a great post BaaBaa ……love it when you do deep thinking

Remember me saying Oceania are a bit like the NZ Warriors …..and how it’s going to be ‘it’s our year’ ….year in year out

Paraphrasing you one could say ‘Warriors are a dud team until they start winning silverware for their fans’

However seems that the Warriors are destined never to win the championship …likewise Oceania might be destined to be a perennial disappointment.

As Bob Marley said ‘In this bright future you can’t forget your past’ so let’s keep hoping destiny is on our side


When you say 'our year' do you mean the share price will rise?

How is the company disappointing you? Or do you mean the share price?

Are you in tears?

Will you ever do any deep thinking?

[Curly]

Nothing wrong with wanting to be a winner aye 69. Lets be honest, that’s why we got into all this in the first place. Patience.

[SailorRob]

Nothing wrong with wanting to be a winner aye 69. Let's be honest, that’s why we got into all this in the first place. Patience.


You win when the net future cash flows can be bought off munters at the lowest possible price.

Not by getting cheap thrills of seeing munters make you pay more and more.

[SailorRob]

If anyone wants to get their head around not just the cash impact of the float, but also the P&L impact of that same float I recommend you pull a handful of annual reports, and then examine and compare the values sitting in the following accounts across the years:

Balance Sheet: deferred management fees ($45m) & Refundable ORAs $879m (p35 of 2023 AR)
P&L notes: management fee income (note 2.2 p46)
Note 3.4: gross versus nett ORAs on p57 - in particular the deductions of $191m & $34m in FY23.

The life cycle of the ORA is 100% is banked and recorded as a gross liability per note 3.4 (and the cash flow report) => 30% is eventually deducted from gross ORA (also per note 3.4), but the offsetting entry for the deduction ends up in deferred management fees on the liability side of the Balance Sheet ($45m as at FY23) => this balance sheet DMF value then gets released to the P&L as income per note 2.2 and finally upon departure of the resident the balance of the ORA float is repaid (less any other fees receivable from the departing resident - per the cash flow report).

Four things:


If you track the numbers through the years you will see relationships between the various DMF numbers (being the deduction from gross, the DMF liability and DMF income) year on year such that forecasting next years DMF contribution to income is relatively trivial.
The $45m of DMF on the Balance Sheet is not a liability, rather it is unearned income.
There is measurable relationship between sales+resales values and the gross float received each year.
The balance of unearned DMF of $45m represents the accumulated difference between the method by which management fees are charged (e.g. 10/10/10 for ILUs) versus how they are released to the P&L (which is over the expected tenure of the client).


DMF income has a snowball effect assuming there are no fundamental changes to 1) contracts, 2) life expectancy, and 3) the accounting policies, and assuming sale prices continue to increase (on average) over time, and that demand exists for the inventory that is constantly turning over. Keep in mind a resale can be up to 7 years later for a villa, or more.

Meanwhile, as SR has pointed out repeatedly, the entire gross ORA has been available to OCA the entire time at zero interest cost to fund whatever OCA wants. Also keep in mind that it is never actually repaid by OCA - the repayment is effectively funded by the incoming resident (plus some more cash). And as Maverick has pointed out, once the pipeline of development slows or stops, this is a cash generating machine much like any other RV.


Some great stuff here, how many have actually done what Ferg suggests??

I will take a guess that less than 0.5% of people who have read this post have actually looked through what is highlighted here.

I will also guess that 100% of people who have read this post have checked the share price the day they read the post.


From note 3.4 -

What is DMF?
An amount equal to a capped percentage of the occupation licence payment is charged by the Group as a management fee for the right of use and enjoy the common areas of the village. The deferred management fee is payable by the resident on termination of the ORA.


Well this is a technicality isn't it. It has already been paid.

[ValueNZ]

Well said.

You're on a hell of a run, PARA, Stellantis, Davita... Everything you touch turns to Gold.

If only you had more capital!

Cheers, it's a shame that those (plus another company called Jackson Financial) make up just 25% of my portfolio. But that's just with hindsight, pretty happy holding the bulk of my NW in OCA even whilst my other positions are running up in price.

Even though I haven't realised any gains on those positions I still feel I should thank you for posting about Stellantis and Davita, as well forwarding that article to me where Bloomstan discusses Paramount.

So thank you very much, I appreciate your expertise and the help you've given me over the past year. :t_up:

[Maverick]

What you are saying makes logical sense BaaBaa and as i've said before any intelligent pushback or dampening keeps things healthy. A great post by you as many have said already.

I interpret the point of your post about insto interest to directly mean the effect it has on the share price. Otherwise, why would we really care if instos like OCA or not.

Your post has inspired me to quantify what has happened to hopefully suggest guidance on what might happen to the share price. Sorry in advance Sailor…share price matters to me.

So firstly, we need to convert the aggregate mood of these institutions into hard numbers. To measure “instos interest” , what better measure than the price/ earnings ratio, PE.This surely describes the encompassing mood of the instos at the time, ( who are the market and set the SP) .

Here's a graph over OCAs listed life at the FY reporting periods of SP, PE and Unpat.
Note that i've reduced SP to a tenth to visually fit the graph …ie SP $1 = 10
https://lh7-us.googleusercontent.com/oKf5sFvvm8vGplS16-h1IyZ68u5Ae-JZdNPisaJ2u266WjEjULOUTMO2tjJPc7SZT2wP5f3K5cZe7D_z hJN3qBoFpmcup0GH0RYjc2zOrwsFjSrYovn4cWd9UdZZfo2Ar3 aJfwZZFAc-woqP2SWKVaU


We can see, despite lumpy deliveries, falling Govt care funding , significant covid costs and disruption and all the dramas, EPS remains astonishingly flat.
Clearly from this , the SP has fallen entirely due to PE compression. In other words the mood of the instos has fallen to , and now is, rock bottom. It seems even cutting the dividend lately didn't make them more grumpy. They are already at maximum grumpiness.

So to get the SP up only one of 2 things are needed, either,


An increase of EPS, or,
A change from the instos mood. (increase of P/E)


I've posted a ton here on why I think EPS is right now improving a lot in this current HY we are currently nearly half through. I now expect EPs FY24 of 9.5c -10c .That's a meaningful jump in 2hy when you consider a flat 1HY result but the numbers are all there.
To me, it's all been solidly confirmed from the HY1 results season and many other also inputs including site visits. EPS will be substantially up primarily due to the 2HY sell down stage of some really cool stuff , good volumes of it and improved Govt care funding. This is also sustainable.

So for fun I've also added my Forecast FY24 EPS value in and then also an artistic stab at the PE upgraded to 12.
12 Seems reasonable to me with new warmth in the property cycle coupled with a rerating for becoming cashflow positive, reducing debt , higher EPS , how strong HY2 will be and then just generally , the mood even now is sooooo much better than 6 months ago on every front.
Every difficulty OCA has encountered for the last 5 years has now been overcome or turned to relative improvement. May I encourage anyone to name any that havent?

We have all observed SP does not change much at all on any reporting day. Therefore things are generally well anticipated by the instos, both the EPS and their mood too. From this , is my own expectation that we should see a material rise , but unorderly, of SP before May 2024 in anticipation of better times.

This just may have already started, looking at the divergence of SP between ARV and OCA of the recent weeks.

[SailorRob]

Sorry in advance Sailor…share price matters to me.


Of course it does...

With the low price for years since the IPO you now have a much greater share of this wonderful business and future cash flows.

Therefore you will make much more money.

[SailorRob]

Sorry in advance Sailor…share price matters to me.

Andrew Brenton who has compounded at 20% CAGR for 25 years.


​'There are lots of examples of companies we own who's share price haven't gone anywhere for many years and we've never worried about it, the US companies that I mentioned that we added to the portfolio 6 years ago, 6 years later and the share price is the same. It doesn't bother us. I would bother us if the company wasn't doing well, but what we do is we own a lot more of those companies today than we did 5 to 6 years ago and at some point, some day, the share price will go up and that's been our experience for 25 years and I will be the case in the next 25 years'

20% CAGR for 25 years.

So why would it bother the Maverick?

[Baa_Baa]

Well I'll be, relative share price performance of the NZ RV's, NZX50 and DJUSRE, since OCA bottomed in April 2023. https://invst.ly/12ls84

[Baa_Baa]

So why would [the share price] bother the Maverick?

Maybe it's because some people want the money to enjoy for themselves, before they're in the rest home dribbling from both sides of their mouths?

:D

[SailorRob]

Maybe it's because some people want the money to enjoy for themselves, before they're in the rest home dribbling from both sides of their mouths?

:D


True and important to understand that while public equity investments give the illusion of extreme liquidity, the fact is that to obtain liquidity at intrinsic can take many many years.

Hence the required minimum 10 year time frame.

[Muse]

Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)

I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.

They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?

Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.

Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.

Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.

OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.

Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.

Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.

I think the uncomfortable question is whether underlying EPS, as defined by OCA and others in the RV industry, is even an appropriate metric to apply a PE multiple to. Lots of work has been done by various brokers and the shareholders association on its many drawbacks (primarily based on what it omits), and the severely lacking correlation to underlying cashflow from operations (ie cashflow ex development). Even old Ryman has signaled it is moving away from its traditional underlying earnings metric, and next year will even stop issuing guidance on it.

Cashflow is king, as they say. but defining it is not straight forward.

[Baa_Baa]

I think the uncomfortable question is whether underlying EPS, as defined by OCA and others in the RV industry, is even an appropriate metric to apply a PE multiple to. Lots of work has been done by various brokers and the shareholders association on its many drawbacks (primarily based on what it omits), and the severely lacking correlation to underlying cashflow from operations (ie cashflow ex development). Even old Ryman has signaled it is moving away from its traditional underlying earnings metric, and next year will even stop issuing guidance on it.

Cashflow is king, as they say. but defining it is not straight forward.

Fortunately for me, selfishly perhaps, I didn't mention 'UN'PAT, or 'U' anything, as I think it is a made-up financial measure and the 'U' is distorting reporting across the RV's (and other sectors) as they all do it differently, to suit themselves. NPAT is a simple measure, it is well understood, levels the playing field and everyone can be judged equally on it.

I say take the 'U' out of everything, is a terrible indeterminate measure and has brought all the CFO's who use it into disrepute, imho. 'Underlying' has no place in financial reporting, end of. It is just financial numbers manipulation to make the numbers look better than they actually are.

[Baa_Baa]

I think the uncomfortable question is whether underlying EPS, as defined by OCA and others in the RV industry, is even an appropriate metric to apply a PE multiple to. Lots of work has been done by various brokers and the shareholders association on its many drawbacks (primarily based on what it omits), and the severely lacking correlation to underlying cashflow from operations (ie cashflow ex development). Even old Ryman has signaled it is moving away from its traditional underlying earnings metric, and next year will even stop issuing guidance on it.

Cashflow is king, as they say. but defining it is not straight forward.

I also agree, 'underlying EPS' is a bogus measure, it depends on what metrics they use for 'underlying'. Just get rid of it, EPS is EPS, these CFO's need to stop stop farking around with the numbers! Especially to make the numbers look better than they are!. EDITDA is EDITDA, NPAT is NPAT, EPS is EPS, etc, underlying 'U' has no place in financial reporting, it is bogus and misleading. The FMA should be looking into this distorted and misleading financial reporting.

[Muse]

I also agree, 'underlying EPS' is a bogus measure, it depends on what metrics they use for 'underlying'. Just get rid of it, EPS is EPS, these CFO's need to stop stop farking around with the numbers! Especially to make the numbers look better than they are!. EDITDA is EDITDA, NPAT is NPAT, EPS is EPS, etc, underlying 'U' has no place in financial reporting, it is bogus and misleading. The FMA should be looking into this distorted and misleading financial reporting.

I think that's the rub of why the SP of RVs are now in a "market value" no lands man...the market is totally unsure of how to value these things. The historical 'for convention' P/NTA is clearly out the window, as is a multiple applied to uEPS, as the later has no semblance to cashflow from operations given the development margins often exclude the cost associated with common facilities, headoffice, care facility construction or core infrastructure.

If one were to breakdown the cashflows from OCA (or any other RVs) core business, excluding development cashflows, the cashflow picture is often negative or breakeven at best. A 10x multiple applied to a negative or breakeven cashflow will never get close to the prevailing shareprice of RVs which implies the marketvalue is totally driven by bluesky/future growth.

Sure there is a particular cycle to the cashflows from a RV's core operation...they will be best when the occupancy is high, resales are in full swing, maintenance capex becomes more defined and granular...but for now, the underlying cashflow from RV companies core operations are negative and the implied CASH returns on invested capital have so far been awful. Even if you strip back the denominator from the equation to remove revaluation gains and make it based on simply cost, the ROIC is still nil or negative with negative cashflow form core operations.

and of course a DCF remains the most robust method of valuing the underlying value of an RV but that is fraught with risk, even setting aside what is the right discount rate. The blowout in inventory (working capital for an RV) stemming from the increased days to sell from homeowners wanting to sell and move, the maintainability in development margins achieved in recent years and the go forward (given inflation and labour constraints), labour constraints on care and central government funding, all pose significant input risk when doing a DCF.

In practice an RV's book value of assets contains a DCF for each underlying asset, completed by an external valuer. And they are surprisingly complicated and consider a lot of variables, but the outputs are hugely sensitive to the inputs. And the value ascribed to consented bare land is even more widely variable as the valuer considers blue sky but discounted back at higher discount rates.

I think accountability and transparency for the RV valuers would be a good thing. How did the cashflow from operations (excluding developments) in the last year compare to what was forecast in each of the previous 5 years? I'd wager a pretty penny the inputs used by the valuers were for high operational cashflows and no where near the negative cashflows experienced. And the market is saying they do not believe in the subjective assessments made by the external valuation experts.

And just because a firm spends X dollars in capex I don't think that means in an underlying, intrinsic way its value of assets has gone up by the same amount, or that its market or book value of equity has. A random company, for instance, that buys a contract at an impossible margin and spends a load on assets to fulfill those assets doesn't mean its worth the same as its assets less net debt. If the assets aren't able to achievable a satisfactory return on capital, that capital spend on assets is in fact value destructive. That's a question that never gets asked in the RV industry.

Anyway I don't have the answers and I don't have nearly the same degree of knowledge on the RV industry that many here do. So take it all with a grain of salt and just random observations and musings. But I will disclose I have bought a wee bit of SUM and ARV in recent months, and I'll happily admit my purchase decision was not an informed one, just wanting a lazy exposure at this point in the cycle.

The value of an equity is based on its FUTURE cashflows - not its historical cashflows on which I've focused - and the predicting the granularity of future cashflows is too hard and too time consuming for me, but I have great respect for those that do give it a go, and it'll only be fair they are richly rewarded if things turn as they project. They've done the work, I haven't, and I've got a lot of admiration for the work thats been done and wish all holders the best.

[Ferg]

I say take the 'U' out of everything, is a terrible indeterminate measure and has brought all the CFO's who use it into disrepute, imho. 'Underlying' has no place in financial reporting, end of. It is just financial numbers manipulation to make the numbers look better than they actually are.

Whilst I agree with the last part (making the numbers look better) I respectfully disagree with the first half. I have no issue with making the numbers look better if it based on reality. The Society of Accountants has itself to blame for introducing layers of complexity with the new USA-centric IFRS reporting. It is impenetrable to all but the Harvard educated experts. Take for example IFRS 16 where a property you rent becomes an asset - it flies in the face of accounting principles and companies with zero external debt (e.g. HLG) are now reporting debt which distorts things like debt/equity ratios. Lord only knows what they are doing with software. Some derivative valuations and this constant requirement to mark things to market are IMO making the accounts more complicated and harder to understand. Accordingly, CFOs have had to "dumb down" their accounts to look through or ignore what I call 'IFRS junk' to get to the underlying numbers. Some CFOs may have taken it too far by including more items but I digress. Having an "all in" number with no explanations as to the one-off foibles, IFRS anomalies or discontinued business units, for example, gives a worse picture than the true operating or, dare I say, underlying, nature of the business. Context is key and CFOs are playing to that. But it has to be based on reality - no dispute from me on that.

[SailorRob]

And just because a firm spends X dollars in capex I don't think that means in an underlying, intrinsic way its value of assets has gone up by the same amount, or that its market or book value of equity has. A random company, for instance, that buys a contract at an impossible margin and spends a load on assets to fulfill those assets doesn't mean its worth the same as its assets less net debt. If the assets aren't able to achievable a satisfactory return on capital, that capital spend on assets is in fact value destructive. That's a question that never gets asked in the RV industry.




Great paragraph here, further to this, for many companies X dollars spent on Capex actually destroys value.

If you spend 10 million on Capex and it returns your cost of capital even, ZERO value has been created.

[bull....]

Rising building costs have led the annual decline in residential construction to accelerate by 7.7%

https://www.1news.co.nz/2023/12/09/construction-activity-slows-as-building-costs-interest-rates-increase/

development margins getting squeezed , no wonder there canning developments

[SailorRob]

The value of an equity is based on its FUTURE cashflows - not its historical cashflows on which I've focused - and the predicting the granularity of future cashflows is too hard

Exactly the reason Berkshire is by far my biggest holding.

Some great classic investing stuff all through Muse's post.

[SailorRob]

Whilst I agree with the last part (making the numbers look better) I respectfully disagree with the first half. I have no issue with making the numbers look better if it based on reality. The Society of Accountants has itself to blame for introducing layers of complexity with the new USA-centric IFRS reporting. It is impenetrable to all but the Harvard educated experts. Take for example IFRS 16 where a property you rent becomes an asset - it flies in the face of accounting principles and companies with zero external debt (e.g. HLG) are now reporting debt which distorts things like debt/equity ratios. Lord only knows what they are doing with software. Some derivative valuations and this constant requirement to mark things to market are IMO making the accounts more complicated and harder to understand. Accordingly, CFOs have had to "dumb down" their accounts to look through or ignore what I call 'IFRS junk' to get to the underlying numbers. Some CFOs may have taken it too far by including more items but I digress. Having an "all in" number with no explanations as to the one-off foibles, IFRS anomalies or discontinued business units, for example, gives a worse picture than the true operating or, dare I say, underlying, nature of the business. Context is key and CFOs are playing to that. But it has to be based on reality - no dispute from me on that.


Great post here, I have been studying the IFRS lease accounting in detail over the last few days and can only conclude that is it a good thing.

I strongly disagree with it and it is a complete cluster but for those who truly understand it and can think through it, it is an advantage as it clouds the water for everyone else.

It completely stuffs up all the balance sheet ratios and returns on capital and all sorts of things.

A company I am looking at on the ASX is made to look like it requires tons of capital to operate because of this stupid lease accounting but the reality is that it requires basically none.

Also it clouds the water for anyone using screeners.

[SailorRob]

Let's not forget that in 2021 underlying earnings understated NPAT by 50% or more.

So they are not always making the official numbers look better.

[Snoopy]

I also agree, 'underlying EPS' is a bogus measure, it depends on what metrics they use for 'underlying'. Just get rid of it, EPS is EPS, these CFO's need to stop stop farking around with the numbers! Especially to make the numbers look better than they are!. EDITDA is EDITDA, NPAT is NPAT, EPS is EPS, etc, underlying 'U' has no place in financial reporting, it is bogus and misleading. The FMA should be looking into this distorted and misleading financial reporting.

I am not sure if the text above was a typo or an exceptionally clever but subtle dig at accounting reporting standards which I was a bit slow to recognise. It is very funny though.

'EBITDA' means 'Earnings Before Interest Tax Depreciation and Amortisation'

'EDITDA' means take away the annual depreciation and amortisation adjustments from earnings and 'Edit' your remaining net earnings in whatever way you like.

It looks like there has been quite a bit of 'EDITDA' reporting in the retirement sector over the last few years. LOL!

SNOOPY

[bull....]

Its clearly stated in OCA account's directors will make up there own assumptions of underlying profit and report this as there results.

[SailorRob]

Its clearly stated in OCA account's directors will make up there own assumptions of underlying profit and report this as there results.

Accounts...

[ziggy415]

Accounts...
Jeez bull, if you cant get the apostrophe in the right place how can I trust what you print is correct....I'm afraid I will never read your posts ever ever ever again so it's only sailor,s posts from now on :scared:

[thebusinessman]

To some it's more important to be technically correct than fun at parties.

[ziggy415]

Its clearly stated in OCA account's directors will make up there own assumptions of underlying profit and report this as there results.
And while I,very got you there I,m sure the there that you put there is not the their that you meant to put there so there :t_up:

[bull....]

And while I,very got you there I,m sure the there that you put there is not the their that you meant to put there so there :t_up:

their there be nice

[Leemsip]

Bull isn’t focused on grammar. Cross referencing hog futures against dry bulk ratios across 6 screens, juxtaposing the 2 month lag in Jackson hole references to “transitory” to Nz retiree count in Nelson district takes concentration people.

[bull....]

Bull isn’t focused on grammar. Cross referencing hog futures against dry bulk ratios across 6 screens, juxtaposing the 2 month lag in Jackson hole references to “transitory” to Nz retiree count in Nelson district takes concentration people.

correct.
grammer does not make someone a good investor. analytical skills, market knowledge and ability to make sound decisions based on info are more important

[bull....]

A dartboard is helpful too.

is that with a beer.
investor do not needs good grammer for be success. many people , even with bad grammer they still good investors. communication not only words but numbers and trends too. some people not good in english but genius in finance. so grammer not important many of my friends not good in grammer but make lot of money.

[bull....]

I agree in general, absolutely. But grammar serves a decent purpose when it removes possible confusion as to the intent of the sentence, or improves readability.

I think Sailor's just winding you up, tbh!

sailor good with grammer but probably not good with money

[SailorRob]

Jeez bull, if you cant get the apostrophe in the right place how can I trust what you print is correct....I'm afraid I will never read your posts ever ever ever again so it's only sailor,s posts from now on :scared:

Yeah imagine him trying to understand IFRS 16!

[SailorRob]

To some it's more important to be technically correct than fun at parties.

Bad breath ain't too fun at parties either an 4 sum1 hoo canrnt rite mabee not bruss teef efer

[SailorRob]

correct.
grammer does not make someone a good investor. analytical skills, market knowledge and ability to make sound decisions based on info are more important

And 12 screens.

Personal hygiene does not help returns either.

[SailorRob]

He provides value to this site (as do you), whether I'm in alignment with his opinions or not, mostly I am. It's not all roses and honey though; I don't agree with his confidence in Oceania, for example (and I did look into it in near-extensive fashion after he mentioned [my memory of it!] that it was his only NZ play).

Grammar comments aren't very helpful, that's my view on that topic. :-)

The fact it's my only NZ holding isn't a reflection on OCA, more a reflection on communism.

NZ is a nasty place for capital and I don't trust the currency.

[SailorRob]

I run my empire off a tiny Acer laptop running an obsolete Windows operating system.

Exactly, Buffett only uses a computer to play Bridge.

I'd bet a very large sum that Bull loses money over time. Written in stone.

[bull....]

Exactly, Buffett only uses a computer to play Bridge.

I'd bet a very large sum that Bull loses money over time. Written in stone.

is that the stone you bang your head with every day trying to figure out buffetts magic formuala

[SailorRob]

I only have one stock on the entire NZ market on my buy list (Infratil), which I haven't bought yet as my staunch $9.49 entry point based on a completely arbitrary calculation of historical pricing for the Medium Big Mac Combo has not been hit yet.

For me it's two transactions. Buying Pacific Pesos and then the company.

[SailorRob]

is that the stone you bang your head with every day trying to figure out buffetts magic formuala

It's his formuullerrr

[bull....]

I know Buffett's magic formula. But I won't mention it [again] because I don't want to upset Sailor and his delicate nature.

yes i know it too lol thats why i have acheived double digit returns for so long and sorry but oca is not on my buy list. i value my peso's

[bull....]

That's not Buffett's magic formula, that you're talking about. That's his myth-making formula. The actual magic formula is somewhat distasteful when put alongside the publicized myth. But yeh I won't say any more, I don't wish for Sailor to accidently drive his boat into a container ship or something as he scrambles to defend Mr Buffett.

too put everyone out of there miserie about buffetts magic formula it is never lose money

[SailorRob]

too put everyone out of there miserie about buffetts magic formula it is never lose money

Out of our what sorry?

[SailorRob]

That's not Buffett's magic formula, that you're talking about. That's his myth-making formula. The actual magic formula is somewhat distasteful when put alongside the publicized myth. But yeh I won't say any more, I don't wish for Sailor to accidently drive his boat into a container ship or something as he scrambles to defend Mr Buffett.

Everyone combined on share trader wouldn't know a tenth of what I do about Berkshire and Buffett, so happy to discuss. I might agree even.

[Maverick]

...I don't wish for Sailor to accidently drive his boat into a container ship or something as he scrambles to defend Mr Buffett.

Honestly just snorted in my coffee on that one....that's funny!

[ValueNZ]

First of all, there are two separate things here.

1) Berkshire has been a wonderful investment for a very long time. I have no issue with this at all; I mean, the Buffett "magic formula" is the reason for this success, and that is to be commended as it has provided very good - and consistent - shareholder return. But that magic formula is something only the very rich can utilize. And Buffett has deliberately implied over decades that he's just a "value" investor - and it's total BS, let's get to point 2).

2) Berkshire and Buffett have for decades had the ability to gerrymander share purchases via two mechanisms not available to regular investors. They are buying preferred stock and placing cronies onto boards. He reduces risk significantly by moving up the queue with preferred stock if there's a problem with a company he has bought into, and the board representation significantly reduces the possibility of problems arising is the first place. Neither of these things are available to your average punter, such as the deluded "value"-type investors you see on this website, who believe that "future discounted blah blah blah" means they're onto a winner and given enough time and patience they'll be in the money. But it's a fantasy; they have no clue what's going on at the company and are subject to the whims of market price for their shares which will likely have value nothing close to whatever fantasy-land value they think it should be. And the common stock they own means when it does go very bad they'll have a pile of shares worth zero.

Hey Azz do you have some evidence to substantiate your claim regarding Berkshire placing cronies on boards, and are you saying that regular investors cannot own preferred stock?

Also what is meant by Buffetts magic formula? I've read many of Buffetts shareholder letters and listened to Berkshires annual meetings have never heard of some magic formula that he has used.

[bull....]

Hey Azz do you have some evidence to substantiate your claim regarding Berkshire placing cronies on boards, and are you saying that regular investors cannot own preferred stock?

Also what is meant by Buffetts magic formula? I've read many of Buffetts shareholder letters and listened to Berkshires annual meetings have never heard of some magic formula that he has used.

i think buffett just modified ben graham's magic formula and that's what lead to it being called buffett's magic formula.

im assuming you applied this magic formula to your investment in OCA ?

[SailorRob]

i think buffett just modified ben graham's magic formula and that's what lead to it being called buffett's magic formula.

im assuming you applied this magic formula to your investment in OCA ?

As per ValueNZ, I've spent over (way over) 3000 hours studying Berkshire and Buffett, I have never heard of this formula.

[bull....]

As per ValueNZ, I've spent over (way over) 3000 hours studying Berkshire and Buffett, I have never heard of this formula.

you need to do some research on ben graham valuation method's. he had some key method's

[Rawz]

As per ValueNZ, I've spent over (way over) 3000 hours studying Berkshire and Buffett, I have never heard of this formula.

Geez Sailor you a slow learner or something? You didnt need to spend that long surely

[SailorRob]

First of all, there are two separate things here.

1) Berkshire has been a wonderful investment for a very long time. I have no issue with this at all; I mean, the Buffett "magic formula" is the reason for this success, and that is to be commended as it has provided very good - and consistent - shareholder return. But that magic formula is something only the very rich can utilize, and Buffett has deliberately implied over decades that he's just a "value" investor - and it's total BS, let's get to point 2).

2) Berkshire and Buffett have for decades had the ability to gerrymander share purchases via two mechanisms not available to regular investors. They are buying preferred stock and placing cronies onto boards. He reduces risk significantly by moving up the queue with preferred stock if there's a problem with a company he has bought into, and the board representation significantly reduces the possibility of problems arising is the first place. Neither of these things are available to your average punter, such as the deluded "value"-type investors you see on this website, who believe that "future discounted blah blah blah" means they're onto a winner and given enough time and patience they'll be in the money. But it's a fantasy; they have no clue what's going on at the company and are subject to the whims of market price for their shares which will likely have value nothing close to whatever fantasy-land value they think it should be. And the common stock they own means when it does go very bad they'll have a pile of shares worth zero.

Will respond in full later, the obvious response here however, is that of all the hundreds of businesses that Berkshire owns 100% of... Thus his men are the entire boards and managers.... Must do way better than public companies that he only has a few cronies on?

His preferred stock usually much safer but far lower return than common and his GFC bailouts etc have added very little to overall performance.

It's actually his size that has massively reduced his returns.

But yeah. If having cronies on the board helps somewhat then having all your people 100% in control must be way way better still.

I'm not arguing that having board representation doesn't help, it does if they're getting instructions from God.

[SailorRob]

Geez Sailor you a slow learner or something? You didnt need to spend that long surely

Early days, I'm just beginning. A very very long way to go.

[SailorRob]

One person on the board is better than none. Having the entire board is even better than that. But it's not "value" investing; it's being very rich, and effectively purchasing the day-to-day knowledge of the workings of the company and also being able to weigh up and be part of decision making.

Again the implications there are that his 100% owned companies would do way better than public ones. And implications are that he'd be only private as much better to have full control.

Neither passes the test.

The wrong or too expensive companies you can have all the control you like and it won't matter.

How does his Apple purchases fit into your framework.

Apple fell 37% after he bought.

Paramount??

Anyone could have bought apple at 10x earnings with no debt. Value investing....

[SailorRob]

One person on the board is better than none. Having the entire board is even better than that. But it's not "value" investing; it's being very rich, and effectively purchasing day-to-day knowledge of the workings of the company and also being able to weigh up the knowledge and be part of decision making.

And how does the fact that by far his best returns were when he didn't have any money?

His partnership days he was way better than under Berkshire.

Facts don't line up with narrative thought what you say is somewhat true.

[SailorRob]

One person on the board is better than none. Having the entire board is even better than that. But it's not "value" investing; it's being very rich, and effectively purchasing day-to-day knowledge of the workings of the company, and being able to weigh up the knowledge and be part of decision making.

Washington Post is an example of where his board membership and mates with Kate made thousands of percent returns but he took everyone else along with him and made the business way better.

[SailorRob]

Sorry shouldn't be doing this on OCA thread...

[SailorRob]

Maybe you can write him a letter, and tell him to stop investing in a manner that allows him board seats. You have facts behind you to prove he'd be better off.

No he wouldn't be better off, it makes everything better, it's beneficial to the company to have the best in the world helping out. Part of his skill as the greatest.

But overall, does he make all these companies that much better?

Is there statistical evidence that Berkshire men on the board lead to outperformance, if so how much and what's it on relation to Berkshire overall.

Buy cheap, estimate future cashflows reasonably well, use borrowed money that you get paid to borrow.

Magic.

[SailorRob]

In a way it does: because I see so much on this thread that implies this is a so-called value play.

Free money I guess you can call a value play.

Berkshire would buy in a heartbeat for reasons Mav laid out.

[RTM]

Sorry shouldn't be doing this on OCA thread...

Nah…it’s good. You and others said about everything there is to say about OCA. Need more info/ data for further consideration. I guess that’s why the convo has morphed….

[bull....]

Free money I guess you can call a value play.

Berkshire would buy in a heartbeat for reasons Mav laid out.

yet buffett has not brought .... says it all. maybe mcquarie by it back one day ... smart cookies they are

[SailorRob]

yet buffett has not brought .... says it all. maybe mcquarie by it back one day ... smart cookies they are

Where would he bring it though.

[SailorRob]

Yeh and he would install a board seat. End of story. (You're admitting he would do exactly this - and then saying he's stupid to do it because he will be worse off! What you're saying makes very little sense, but I respect your opinion.)

Wow Azz Azz... Where did I say he'd be stupid to do it and he'd be worse off? Remember slander and lying gets people banned!

Please show me where I said he'd be stupid to install a board seat and it would make him worse off, or I will have to make a complaint.

[Daytr]

What has any of this got to do with OCA,
If you want to discuss Buffett, start another thread.

[bull....]

What has any of this got to do with OCA,
If you want to discuss Buffett, start another thread.

buffetts next 13f ?

[ValueNZ]

Azz really speedrunning his next ban ��

[Snoopy]

I reckon the English-speaking world should get rid of the possessive apostrophe. It serves no real purpose - ie, every single time it's missed out or added incorrectly, the people reading the sentence understand that it is possessive (or not), hence how SailorRob was able to catch the "mistake". And especially if not reading written word but instead listening to spoken word, there is no such thing as the possessive apostrophe and the world has not broken down into a state of confusion and anarchy. The other issue is your average English speaker cannot figure out the apostrophe rules (and the people teaching English in schools here likely have no clue as to the rules either); the rules are reasonably complicated - some examples: the collective noun is treated as singular for the apostrophe,


That is because a collective noun is singular. That is so you can differentiate between 'a herd of cows' (one herd) and 'herds of cows' (more than one herd).



sometimes you place the apostrophe before the "s" and sometimes after, and many place names and brand names have already gotten rid of it,


Singular noun, put the possessive apostrophe before the 's'. Plural noun. Put the apostrophe after the 's'. Not too complex.

BTW it does make a difference Azz (the bit I quoted in bold) . Consider what might happen in your day job as a stable-hand. If I wrote out on the board your duties for the day like this:
"Azz, Pick up what came out of the horse's arse."
That would be an instruction to pick up the brown stuff from around the feet of my favourite nellie.

But if instead I wrote:
"Azz, Pick up what came out of the horses, arse."
That would be a non-specific instruction where I was asking to to run around after more than one horse while demeaning you as an individual in public at the same time.



plus the most possessive word there is, "it --> its", for some reason is an exception and has no apostrophe in written sentences such as, "The dog ate its food."

The reason for that is that it's is a contraction short for "it is". That is why "its" as a possessive word drops the apostrophe. To avoid confusion with the contraction.

SNOOPY

[SailorRob]

Azz really speedrunning his next ban ��

Very very quickly. Has specifically stated that I said Buffett is stupid for and worse off for having board rep... Everyone can read what I have said. When challenged on the lies, changes the story.

Azz has repeatedly stated he sees OCA being extremely undervalued and it's his largest position. This is why the upset...

[Daytr]

I have never been banned. I've been censored, however.

I'm surprised at you, I thought you were in your learning phase of development?

No your status clearly said banned.
How many times is that now?
Still off topic

[SailorRob]

I haven't changed my story. I'm genuinely telling you it would be helpful to do the following. (I'm not going to post all your replies below into a post and go thru them. Just explain it better.)

Please write a succinct and non-cryptic post as to why you think there is - or isn't - truth to what I'm saying: which is that there's a world of difference between you* identifying a "value" play and Buffett identifying one but he will get board seats and possibly preferred stock - whereas you* will get neither I'm assuming.

*I really mean the average punter

The Apple Computer Company.

Occidental petroleum where I'm currently many many hundreds of percent above Buffett. I bought shares off Berkshire...

[Snoopy]

It's a whole lot of trouble for very little gain. That situation is exceedingly rare compared to easily seen "possessive without an apostrophe" situations. Also, as I said we don't worry about this possessive signal when speaking.


The apostrophe is a way to link 'the possessor' with 'the possessed'. Just because it is obvious in some situations (in your own paradigm) does not mean it is obvious in other paradigms for other people. Sometimes it is very important to distinguish who 'owns' what.




That makes no sense at all. Lots of English words have the same spelling and multiple meanings. People would confuse:

"The dog ate it's food"

into this...:

"The dog ate it is food"........ ? I don't think so.


I am going to change the animal so as to not offend any of our ethnic friends reading this.

"The sheep ate its food" means the sheep scoffed the grass.
"The sheep ate, it's food" means the sheep is fattened up for the feast to follow.

(with apologies to any vegetarians offended by this.)



And it contradicts the logic behind the possessive apostrophe. A thing, "it", loses the possessive apostrophe logic ("The dog ate its food.") whereas:

"The dog ate Jenny's food."

...keeps the logic.

Yes but. "I can't find him, he's gone." and "I can't find it, it's gone" also keeps the logic. It depends what 'logic paddock' you are in. It is best to make a choice, one way of the other what '"its" and "it's" means. Whatever choice you make will break the logic in the other camp. You can't salsify everybody no matter what choice you make.

SNOOPY