OCA - Oceania Group - retirement villages

[Ferg]

Thanks mistaTea. You can verify/test the assumptions by reading the accounts as SR suggested. In response to your statements:

1. Can you elaborate on this - was this the statement about including Bream Bay land? This was my critique of the method underlying the info-graphic but not crucial to Aaron's question. Possibly not relevant.
2. This is not an assumption and can be verified per 3.1 under the heading 'Investment property under development at fair value; and also note 3.2 under the column 'Freehold Landand Buildings Under Development'.
3. Acknowledged assumption regarding AR values per my later post, but it is not an assumption the proceeds from new sales are used to repay the dev debt per the OCA transcript.
4. I'm not sure what you mean by 'unaccounted'. All capex was certainly accounted for by OCA and shuffling funds (or words to the effect) was mentioned on the analysts call. The $60m capex which is not part of development assets is not an assumption - refer note 3.1 under 'Completed investment property at fair value' and can be further confirmed by checking how OCA derived the value for 'development assets' as outlined by me earlier.

Hope that helps.


Good post Ferg, and logically laid out.

But how do we test/verify the various assumptions you have made?

1. Inclusion/exclusion mismatches for specific assets and liabilities.

2. Impact of fair value revaluations on book values.

3..Accounts Receivable increases and deferred settlements affecting development debt.

4. Unaccounted capitalised expenditure and fund shuffling.

[mistaTea]

Thanks mistaTea. You can verify/test the assumptions by reading the accounts as SR suggested. In response to your statements:

1. Can you elaborate on this - was this the statement about including Bream Bay land? This was my critique of the method underlying the info-graphic but not crucial to Aaron's question. Possibly not relevant. Ok yes, it was relating to the Bream Bay land comment.
2. This is not an assumption and can be verified per 3.1 under the heading 'Investment property under development at fair value; and also note 3.2 under the column 'Freehold Landand Buildings Under Development'. Ok, thank you - will take a look.
3. Acknowledged assumption regarding AR values per my later post, but it is not an assumption the proceeds from new sales are used to repay the dev debt per the OCA transcript. Ok.
4. I'm not sure what you mean by 'unaccounted'. All capex was certainly accounted for by OCA and shuffling funds (or words to the effect) was mentioned on the analysts call. The $60m capex which is not part of development assets is not an assumption - refer note 3.1 under 'Completed investment property at fair value' and can be further confirmed by checking how OCA derived the value for 'development assets' as outlined by me earlier. Ok, 'unaccounted' was perhaps the wrong term. It sounded like you were making some assumptions to reconcile the $60M.

Hope that helps.

Cheers, Ferg. Comments in line.

Good work.

[SailorRob]

I don't get this statement. I have investments in many companies I don't fully understand. Personally I don't think it's necessary to have a nuts and bolt deep understanding of every nuance of a business. If that were true I doubt anyone would invest in anything. My main reason for buying OCA is the ageing population. Simple as that for me!

Well maybe this is why you dramatically underperform just owning an index, like 90% of professional investors. You'd be far better just owning a simple index fund.

Your main reason is ridiculous, an aging population doesn't mean that a certain company will be profitable or earn an acceptable return on capital. For gods sake you must realise this?

[SailorRob]

“My main reason for buying OCA is the ageing population. Simple as that for me!”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses[/QUOTE]

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.

[SailorRob]

”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses

Fair opinion indeed but it's the equivalent of saying that everyone has to eat and that's a good reason to invest in growing food?[/QUOTE]

Not a fair opinion but one of the stupidest things I've ever heard.

You could think of 50 significant trends that a population is doing across the world, won't help you one but in investing.

[Bikeguy]

”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.[/QUOTE]

Your right to your opinion is respected

[ValueNZ]

Does anyone know how the discount rate for the villages is determined? The range is 14-20%, with the median being 14.9%. This seems rather high to me, suggesting that they are understating what their assets are actually worth. A discount rate of 8%-10% in my mind would be more appropriate?

Has anyone here actually done a full DCF of one of the villages? I'd love it see it... Just so I can get my head around how these valuations actually are carried out in it's entirety.

[SailorRob]

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.

Your right to your opinion is respected[/QUOTE]

Do you think other market participants may have had this profound insight of yours as well?

Seriously dude, listen to what I'm saying.

[Balance]

Deleted

Quotes not working properly

[ValueNZ]

And learn how to do the opposite and not lose money!
How are those Synlait bonds going for ya?

Good luck getting your principal back.

[Balance]

How are those Synlait bonds going for ya?

Good luck getting your principal back.

Don’t you worry about me. I could lose the SML bond whole lot ( which I will not) and still have plenty of gains to more than offset the loss.

One foray into OCA and I have made more money on the stock so far than you have made since you started speculating in the dog. :t_up:

You just worry about how poor you are going to be, investing with the garbage ideas you are running with. Stacking supermarket shelves and losing monies - that’s your life?

Btw, you figure out how to calculate the mark to market price of and value bonds yet? :D

[ValueNZ]

Don’t you worry about me. I could lose the SML bond whole lot ( which I will not) and still have plenty of gains to more than offset the loss.

You just worry about how poor you are going to be, investing with the garbage ideas you are running with. Stacking supermarket shelves and losing monies - that’s your life?

Btw, you figure out how to value bonds yet? :D
25k investment portfolio at 18 whilst studying at University (1.5x full time load)... What were you doing at 18?

Go f yourself.

[SailorRob]

Don’t you worry about me. I could lose the SML bond whole lot ( which I will not) and still have plenty of gains to more than offset the loss.


And he's as certain of this as he was OCA capital raise last year.

[Balance]

And he's as certain of this as he was OCA capital raise last year.

Which OCA defer by stopping dividends, selling assets and stopping developments. :t_up:

[Ferg]

Well that escalated quickly. Chillax, kiss and make up....


https://www.youtube.com/watch?v=rC95MEenIxA

[allfromacell]

My approach is simple, just watch the NTA and just keep an eye on debt levels.

As long as the assets booked represent a realistic valuation, I'm more than happy with this approach as a property investment play. OCA has been able to sell some of it's less desirable assets at book value this FY which helps build my confidence in the NTA. Happy with managements answers on the call. It will be interesting to watch debt levels over the next 24 months as they 'deleverage'.

If development stops and you remove all development related costs and just rely on resales the business will surely be profitable. If not, just sell the assets and eat the NTA.




FY
NTA
YoY Growth (%)


17
0.74
-


18
0.85
14.86%


19
1.01
18.82%


20
0.95
-5.94%


21
1.2
26.32%


22
1.32
10.00%


23
1.33
0.76%


24
1.44
8.27%

[Balance]

25k investment portfolio at 18 whilst studying at University (1.5x full time load)... What were you doing at 18?

Go f yourself.

Touchy touchy. :D

I was getting ready to take on the world at 18 years old while enjoying my teenage years. The joys of youthful exuberance … romance, bromance and experiences only teenagers can have.

Certainly not stacking supermarkets shelves and losing hard earned monies by investing in dog stocks! Woof! Woof!

You just keep a’ stacking ‘em shelves - all wasted efforts of course but hopefully you learn something worthwhile from all that hard work. :eek2:

[ValueNZ]

Touchy touchy. :D

I was getting ready to take on the world at 18 years old while enjoying my teenage years. Certainly not stacking supermarkets shelves and investing in dog stocks!

You just keep a’ stacking - all wasted efforts but hopefully you learn something g from the hard work. Good on you!
Buffett quite literally built an empire off cash he made running a paper route...

Small amounts of cash compound out to significant sums just by earning a half decent return, and having a long runway.

[Balance]

Buffett quite literally built an empire off cash he made running a paper route...

Small amounts of cash compound out to significant sums just by earning a half decent return, and having a long runway.

He knew what he was doing.

You don’t and it’s so obvious!

Now be a good man and go stack some more supermarket shelves. You need to plug the losses on your OCA portfolio.

[SailorRob]

He knew what he was doing.

You don’t and it’s so obvious!

Now be a good man and go stack some more supermarket shelves. You need to plug the losses on your OCA portfolio.

You have one thing that balance can never have ValueNZ, and that is the potential to retire young and be financially independent.

Life has passed Balance by and his aggression towards you is understandable at his age and need to stay on the rat wheel compared to the opportunities you have in front of you.

He's had his opportunity and messed it up.

[mistaTea]

Jesus.

Why can’t we all just love each other.

[Balance]

You have one thing that balance can never have ValueNZ, and that is the potential to retire young and be financially independent.

Life has passed Balance by and his aggression towards you is understandable at his age and need to stay on the rat wheel compared to the opportunities you have in front of you.

He's had his opportunity and messed it up.

LOL.

If you weren't such an obvious social misfit, I may actually think of inviting you to my tropical seaside home.

Never mind, you just a' keep spouting your nonsense and live in your deluded world.

Maybe, you can help ValueNZ stack some shelves? :D

[Toddy]

Jesus.

Why can’t we all just love each other.

Yep. All this valuation accounting theory rubbish lead to long hours in the office debating over, well, theory.

[Balance]

From Beagle on the other site :

For those that don't know, there's a full transcript of the analysts call on the other channel and it appears there's lots of confusion with the financial accounts...there's a big surprise lol.

It would seem they are selling some care suites on credit terms.

There seems to be a lot of confusion about the debt level and how come its grown.

Also a lot of confusion about unsold stock level's, reported number has gone down from first half number but the number built in the second half exceeded the number sold in that half.

Winner suggested obfuscation. Its either that or a real dog's breakfast, or more likely some combination of that.

The only value I can add to that debate is to me it seems quite clear that at the first half result in late November they showed a graphic of unsold stock and separately identified numbers which were temporarily occupied as premium room accommodation. At the full year result the unsold numbers were down because they no longer included unsold stock temporarily occupied under premium daily rate.

Whether this is deliberate obfuscation or just generally a really slack and inconsistent approach used by the CFO from one period to another, judge for yourself but my opinion is the accounts are actually extremely messy and complicated even for professionals and analysts to understand and the senior management team do a very, very poor job maintaining consistency with reporting around certain key details of key metrics from one period to another. That does them absolutely no favours with institutional investors.

The increase in debt level is again concerning but it appears they are clearly in "tapering off development mode" and will be reducing their build rate in the future in line with how RYM and ARV are doing this to try and stop their debt going up. I think new unit deliveries in FY26 and FY27 will be quite modest. The impact of that on profit in future years remains to be seen.

Management seems confident that returns on care beds are improving and I acknowledge they have made decent progress with the reduction is basic care services, in terms of the number of beds with basic care villages sold or closed which is encouraging but there is a long way to go.
My view is that in certain respects the company has been very poorly lead and governed in the last few years. Even in FY25, despite hundreds of new unsold care suites they are still building heaps more of them. With proper leadership that simply wouldn't be happening. From the call, thankfully it would seem FY25 is the last year for quite some time that vast amounts of new care suites will be built.

Interesting comment from Brent that the new CEO has a lot of "cleaning" to do. Can't help wondering what "cleaning" really means ? Like others on the other channel, I think he has "checked out" already.

Conclusion: I think this looks okay to me as a bondholder and the level of debt will gradually start to come down in the years ahead. Shareholders can make their own minds up but for me, this seems anchored in the sub 50% of NTA zone until such time as they can clearly execute on a greatly enhanced volume of new unit sales. Forbar have been picking 275 for FY25, up nearly 50%. That looks like fantasy land stuff to me with the housing market in the sombre state it's in.

One thing that really caught my eye on the call was only 13 confirmed apartment sales at the Helier out of (from memory 72 apartments) and that's with all the pre-construction sales hype, opening a sales office in St Heliers and Brent previously assuring shareholders they had really good levels of enquiry.
Given the very best north facing units with sea views always sell quickly to cashed up MINO's (money is no object) I think its going to be a very long hard slog to sell the other 59 units.

Maybe the new CEO brings a new approach that generates better results or maybe just even more ESG focus...time will tell.
Disc: Bondholder,, no shares held..

Just some of my thoughts. If others see it very differently that's absolutely fine and good luck.

[Bikeguy]

Your right to your opinion is respected

Do you think other market participants may have had this profound insight of yours as well?

Seriously dude, listen to what I'm saying.

I do think you have some good insights, and I have taken many of them onboard at times Sailor,

I do not think for other market participants, so unless they share their opinions I have no idea what their insights are…

I still think that a fundamental such as aging is very good supply/demand environment for a business involved in retirement housing etc, and not once have I suggested it is the “only” requirement for a successful investment in this sector…

It is up to each investor as to which business they think will be successful in producing them their best return on their investment.

[ValueNZ]

If you weren't such an obvious social misfit, I may actually think of inviting you to my tropical seaside home.
Sounds to me like you've exchanged freedom for a bach.

Accumulate productive assets that put cash in your pocket, instead of stuff to impress others that take cash from your pocket. This is the way you get really rich.

[SailorRob]

Sounds to me like you've exchanged freedom for a bach.

Accumulate productive assets that put cash in your pocket, instead of stuff to impress others that take cash from your pocket. This is the way you get really rich.

And do you notice how he and Daytr always talk about how much fun they had in their youth?

That is a euphemism for they messed up and need to work till death but at least had some fun.

[Balance]

And do you notice how he and Daytr always talk about how much fun they had in their youth?

That is a euphemism for they messed up and need to work till death but at least had some fun.

Yawn.

And you invest and spout your nonsense the same way you assume you know people like me?

[SailorRob]

LOL.

If you weren't such an obvious social misfit, I may actually think of inviting you to my tropical seaside home.

Never mind, you just a' keep spouting your nonsense and live in your deluded world.

Maybe, you can help ValueNZ stack some shelves? :D

Just give me the address and I'll come in my yacht.

And Balance, I can come any time as I'm independent.

Don't worry though that leave you applied for should come through.

[Daytr]

15114
minimum message length

I've been thinking about the sales margins which are a lot higher than the company's own forecast not that long ago.
To be able to still get 31% margin on new builds?
The number doesn't pass the sniff test to me in the current market.

So it begs the question instead of cutting prices as much as OCA predicted, what incentives are they offering & where will these show up in the accounts in future?
A year free of body corporate fees perhaps?
Maybe more?

If this is the case, what impact will it have on the day to day operating cashflow that was negative $40M in the last year?
Also if this is the case as For Bar theorized, I would hope that OCA were transparent about it.

This industry or OCA really needs to clean up their act in regards reporting. It's unnecessarily overly complicated which raises suspicion in itself.

[SailorRob]

Balance, is that the Beagle formerly of Sharetrader who was permanently banned after trying to implement legal proceedings on other members?

The one that bought OCA on the IPO, raved about it for years as being better than the others, bought all the way up to the top and then capitulated and lost half of his substantial investment?

Or is it another Beagle?

[SailorRob]

I've been thinking about the sales margins which are a lot higher than the company's own forecast not that long ago.
To be able to still get 31% margin on new builds?
The number doesn't pass the sniff test to me in the current market.

So it begs the question instead of cutting prices as much as OCA predicted, what incentives are they offering & where will these show up in the accounts in future?
A year free of body corporate fees perhaps?
Maybe more?

If this is the case, what impact will it have on the day to day operating cashflow that was negative $40M in the last year?
Also if this is the case as For Bar theorized, I would hope that OCA were transparent about it.

This industry or OCA really needs to clean up their act in regards reporting. It's unnecessarily overly complicated which raises suspicion in itself.

When you find the Alphabet overly complicated it doesn't help with understanding OCA accounts.

[Balance]

When you find the Alphabet overly complicated it doesn't help with understanding OCA accounts.

Go and stack some more supermarket shelves. It suits the level of your intellect.

[ValueNZ]

Go and stack some more supermarket shelves. It suits the level of your intellect.
The irony here is that Rob doesn't need to work (in a traditional sense anyway), he invests his own capital.

You on the other hand? Like Rob said, you'll be working until you die.

[Balance]

The irony here is that Rob doesn't need to work (in a traditional sense anyway), he invests his own capital.

You on the other hand? Like Rob said, you'll be working until you die.

Like Rob said … pathetic.

Your Rob who challenges posters to bets and then, behaves like the impoverished snivelling coward he is to negate the bets when his bets are accepted.

You sure know how to read people - hope you know how to stack shelves better!

Now go back and stack more supermarket shelves so you can plug your losses on OCA.

[SailorRob]

Balance, would you care to share with us what your returns have been over the last 5 years, CAGR?

Across your entire net worth, don't hide behind cash or just report equity portfolio return, the whole lot.

Thanks.

Oh, you're going to find a reason not to?

[ValueNZ]

You’re Rob
No I'm not.

[Balance]

No I'm not.

Your Rob …

[SailorRob]

Your Rob …

*you're....

[ValueNZ]

Your Rob …
Right after you posted this?

It suits the level of your intellect.
Yikes. Maybe someday you'll learn the difference between your and you're.

But of course I'm the idiot because I stack shelves part-time while doing 1.5x a normal university workload. :confused:

[Balance]

*you're....

Your Rob …

[Balance]

Right after you posted this?

Yikes. Maybe someday you'll learn the difference between your and you're.

But of course I'm the idiot because I stack shelves part-time while doing 1.5x a normal university workload. :confused:

Sounds to me like you have learnt nothing from doing your university courses.

Which is why I sincerely hope you know how to stack shelves properly!

[winner69]

Does anyone know how the discount rate for the villages is determined? The range is 14-20%, with the median being 14.9%. This seems rather high to me, suggesting that they are understating what their assets are actually worth. A discount rate of 8%-10% in my mind would be more appropriate?

Has anyone here actually done a full DCF of one of the villages? I'd love it see it... Just so I can get my head around how these valuations actually are carried out in it's entirety.

Using 8% to 10% discountrate would have a profound impact on valuations eh

Maybe NTA is actually over 2 bucks

[Daytr]

Anyone raising questions or risks around OCA is shot down with personal put downs by SailorBoy.

Best defense is attack, personal attacks.
It's so childish as is the back and forth on this thread. One common denominator, SailorBoy.

Not sure what you are trying to achieve other than display your own insecurities & childish mindset.

It's getting very boring.

[mistaTea]

Might need to run the chat from today through AI to see if it can work out who has the biggest d1ck.

I certainly can’t tell 🤣

[ValueNZ]

Sounds to me like you have learnt nothing from doing your university courses.

Which is why I sincerely hope you know how to stack shelves properly!
A average so far. And I only attend half the lectures.

And you're right I haven't learnt much from my university courses. Instead I learnt finance from the worlds greatest investors, like Benjamin Graham and Buffett. I read The Intelligent Investor when I was 16-17, have read/listened to nearly all of the work that Buffett has created (partnership letters, Berkshire letters, annual meetings), and I am constantly reading annual reports. Basically anything I can get my hands on from individuals with a proven track record of outperformance.

Anyway I've had enough discussing this with you. Goodbye

[Balance]

Might need to run the chat from today through AI to see if it can work out who has the biggest d1ck.

I certainly can’t tell ��

It’s how and what you drill, not the size of the drill? :t_up:

[mistaTea]

It’s how and what you drill, not the size of the drill? :t_up:

LOL! I can appreciate that!

[Balance]

LOL! I can appreciate that!

Or as my ex-secretary used to say to the new interns, it’s the angle of the dangle! :p

[Cupsy]

Touchy touchy. :D

I was getting ready to take on the world at 18 years old while enjoying my teenage years. The joys of youthful exuberance … romance, bromance and experiences only teenagers can have.

Certainly not stacking supermarkets shelves and losing hard earned monies by investing in dog stocks! Woof! Woof!

You just keep a’ stacking ‘em shelves - all wasted efforts of course but hopefully you learn something worthwhile from all that hard work. :eek2:

Maybe you're attempting light hearted humor here, but it's not coming across as comedy.

[mistaTea]

LOL.

If you weren't such an obvious social misfit, I may actually think of inviting you to my tropical seaside home.



Clearly Bob is out, probably value too…

But are the rest of us still in the running for a trip?

[SailorRob]

I don't get this statement. I have investments in many companies I don't fully understand. Personally I don't think it's necessary to have a nuts and bolt deep understanding of every nuance of a business. If that were true I doubt anyone would invest in anything. My main reason for buying OCA is the ageing population. Simple as that for me!/QUOTE]


“My main reason for buying OCA is the ageing population. Simple as that for me!”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses


I do think you have some good insights, and I have taken many of them onboard at times Sailor,

I do not think for other market participants, so unless they share their opinions I have no idea what their insights are…

I still think that a fundamental such as aging is very good supply/demand environment for a business involved in retirement housing etc, and not once have I suggested it is the “only” requirement for a successful investment in this sector…

It is up to each investor as to which business they think will be successful in producing them their best return on their investment.


Apologies Kiwical and Bikeguy for my reaction.

I agree with not needing to have a nuts and bolts deep understanding of every nuance of a business.

It's the part 'My main reason for buying OCA is the ageing population. Simple as that for me'! That got me going.

Seriously we need to be better than this, we need to think through the implications of things and ask 'and then what' for everything.

Identifying a trend such as an aging population or a market that is guaranteed to grow will give you no reason whatsoever in and of itself to make an investment and may actually in most cases be a negative thing. To understand why this is you need to study the base case rate for these things over time.

The only exception may be of you have identified a market or trend that others have not.

Generally speaking, if there is going to be an obvious growing demand for something, such as an ageing population, in a free market economy this will attract capital and resources This could be from a range of sources like a new retirement company IPO using the story of 'aging population' to entice 'investors', current listed companies competing for this increased demand and overbuilding, small retirement business owners expanding their facilities or starting a new small village - the list goes on. The obvious demand can be the death of the industry.

Do a study of the obvious demand coming into the commercial airline business in the mid 20th Century, the Auto industry... The THOUSANDS of bankruptcies and the three of four companies that made it and then THEY went bust too.

Look at mobile phones - demand obvious and the top dog Nokia... Well obvious.

There are so many bloody examples, why would you think this is different?

Aside from these points which BOOKS have been written about, let's touch on another more obvious point.

The future demographic characteristics are extremely well known and modelled, there is high quality data out there for all to see, we can even see different projections to include different immigration levels, different average lifespans etc.... So this is to say that it's NOT a reason to buy OCA due to the aging population as this is fully factored into the price you're paying as you dont have information the market does not.

The worst thing is thinking like this will actually also misprice the stock in the upwards direction meaning lower returns.

So to even say that the aging population is a reason to buy is bad enough. But to say that it's the main reason is sheer madness and then to insinuate that due to this profound insight you don't need to know much of the nuts and bolts as it's just 'this simple' - having the same insight as everyone else and expecting this to be a reason to buy...

I see in another post, you made a comparison with Japan, i.e. what has happened to the Japanese population... So did you then conduct a study on how this affected the aged care industry there? Did you look back to a time when they were faced with the aging population coming on, and see how the demand was met? Did buying retirement companies back then lead to incredible returns, average returns or low?

Well hell this was enough for me to put down the Sheet which I was rebuilding and issue a pretty harsh response.

Come on people - you have to EARN that money that you're investing, don't do stupid $hit. Think how many hours that it takes AFTER tax to obtain that money and maybe spend that amount of time thinking about things before investing it.

Don't go to all the effort of getting money and then being like 'ohhh myyyy, duhhhh NZ population is aging, I'll buy OCA - its that simple duhhhh...

Sorry but come on.

[mistaTea]

Apologies Kiwical and Bikeguy for my reaction.

I agree with not needing to have a nuts and bolts deep understanding of every nuance of a business.

It's the part 'My main reason for buying OCA is the ageing population. Simple as that for me'! That got me going.

Seriously we need to be better than this, we need to think through the implications of things and ask 'and then what' for everything.

Identifying a trend such as an aging population or a market that is guaranteed to grow will give you no reason whatsoever in and of itself to make an investment and may actually in most cases be a negative thing. To understand why this is you need to study the base case rate for these things over time.

The only exception may be of you have identified a market or trend that others have not.

Generally speaking, if there is going to be an obvious growing demand for something, such as an ageing population, in a free market economy this will attract capital and resources This could be from a range of sources like a new retirement company IPO using the story of 'aging population' to entice 'investors', current listed companies competing for this increased demand and overbuilding, small retirement business owners expanding their facilities or starting a new small village - the list goes on. The obvious demand can be the death of the industry.

Do a study of the obvious demand coming into the commercial airline business in the mid 20th Century, the Auto industry... The THOUSANDS of bankruptcies and the three of four companies that made it and then THEY went bust too.

Look at mobile phones - demand obvious and the top dog Nokia... Well obvious.

There are so many bloody examples, why would you think this is different?

Aside from these points which BOOKS have been written about, let's touch on another more obvious point.

The future demographic characteristics are extremely well known and modelled, there is high quality data out there for all to see, we can even see different projections to include different immigration levels, different average lifespans etc.... So this is to say that it's NOT a reason to buy OCA due to the aging population as this is fully factored into the price you're paying as you dont have information the market does not.

The worst thing is thinking like this will actually also misprice the stock in the upwards direction meaning lower returns.

So to even say that the aging population is a reason to buy is bad enough. But to say that it's the main reason is sheer madness and then to insinuate that due to this profound insight you don't need to know much of the nuts and bolts as it's just 'this simple' - having the same insight as everyone else and expecting this to be a reason to buy...

I see in another post, you made a comparison with Japan, i.e. what has happened to the Japanese population... So did you then conduct a study on how this affected the aged care industry there? Did you look back to a time when they were faced with the aging population coming on, and see how the demand was met? Did buying retirement companies back then lead to incredible returns, average returns or low?

Well hell this was enough for me to put down the Sheet which I was rebuilding and issue a pretty harsh response.

Come on people - you have to EARN that money that you're investing, don't do stupid $hit. Think how many hours that it takes AFTER tax to obtain that money and maybe spend that amount of time thinking about things before investing it.

Don't go to all the effort of getting money and then being like 'ohhh myyyy, duhhhh NZ population is aging, I'll buy OCA - its that simple duhhhh...

Sorry but come on.

This is very good advice.

[SailorRob]

Thanks and that's exactly how I see it as well. I'm not driving at anything other than the P&L includes the net proceeds from sales & resales as well as the revaluation of the entire portfolio. Cheers


Ok - I just re-read this part again and no this is not correct per the reasons outlined in my previous post. Yes resale gains and development margin are there in the underlying P&L but neither realised gains nor the 'net proceeds from sales & resales' are in the standard P&L. The standard P&L contains the unrealised gains as calculated by the independent valuers. The underlying P&L contains the realised gains as calculated by Management. Per the Venn diagram analogy, these data sets may or may not overlap from an output perspective, so the bold part of your statement is incorrect. As Baa_Baa mentioned one can't reimagine or reinterpret the results in ways not presented. I can't explain this any other way.....what is not to understand?


Hi Day Trader, 64 pages back now, but I don't think you ever responded to this.

It's ok if you don't understand.

[Greekwatchdog]

For Bars Review by Andrew Ibbotson

OUTPERFORM


Oceania Healthcare (OCA) reported an in-line result at our annuity EBITDA line and a decent beat at the volatile new sales gain line. We see the results as a side show to the broader issues of: (1) too much debt; (2) capital raise concerns; and (3) long-term cash generation and profitability. On the first two issues we believe OCA got the message and appears to be targeting a dramatic reduction in capex. Capex declined by ~-NZ$50m sequentially in 2H24, and we estimate investing cash flow for the next three years to be ~NZ$100m annually, half the previous three years. This will result in a substantial decline in new unit deliveries in FY26 and FY27, but the associated ~NZ$300m lower net debt is far more important for the investment case. With assets ~7x its market value of equity, lowering debt rather than growing assets should be the focus — profitability should follow. We reiterate our OUTPERFORM rating with an increased target price of NZ$1.00.
What's changed?
Earnings: Increased annuity EBITDA +2%/+5%/+3% and underlying earnings +12%/+18%/+1% over FY25/FY26/FY27
Target price: Increased to NZ$1.00, due to lower net debt and increased earnings offsetting lower dividends.
The Helier appears to be performing well — a young portfolio should command a higher earnings multiple
The most significant surprise versus our estimates was OCA's expectation to have recovered all capex for its flagship development, The Helier, by the end of FY25. OCA has fallen short on its expectations before, but this suggests a reduced tail risk. More broadly, 85% of OCA's book value of assets now come from sites developed or acquired since 2017. A young and not fully sold down portfolio under earns today but should deliver stronger growth going forward. We estimate that OCA has the lowest level of resales relative to independent living units (ILUs) and the largest gap between ILU new and resale prices in the sector. Both point to growth ahead.


Signs are accumulating that we are through the worst in care
OCA reported care EBITDA from ongoing operations ~+8% ahead of our estimates, up ~+15% year-on-year in 2H24. This was driven by a combination of daily care fees growing ahead of staff expenses for the first time since listing, and continued growth in DMF and resale gains. One swallow does not a summer make, but we forecast care margins to expand meaningfully from here.


The aged care companies have a credibility issue with regards to non-GAAP disclosure; OCA did not help itself
Non-GAAP measures make up ~80% to 90% of through the cycle ‘underlying earnings’ for the major listed aged care operators. Consequently, the quality, consistency and accuracy of these many non-GAAP disclosures is crucial. At 1H24 OCA stated that it had 409 new units ‘currently available for sale’ and 382 ‘additional units currently under construction’. As it turns out, rectified but not highlighted at this result, OCA counted ~100 units that were delivered in 2H24 in both categories.

[winner69]

Another great win against the odds for the Warriors. The fans are in raptures and it seems some who may have lost the faith have returned. Maybe turning point of the season …..’this is our year’ back on track.

Oceania share price went up last week after a great report from management. Faithful really excited with the result and even a guru broker says OUT PERFORM. Again a turning point and share price gaining momentum and heading to a buck. This will be our year says Oceania fans.

So a great week. UP THE WAHS and go Oceania

[SailorRob]

For Bars Review by Andrew Ibbotson

OUTPERFORM


Oceania Healthcare (OCA) reported an in-line result at our annuity EBITDA line and a decent beat at the volatile new sales gain line. We see the results as a side show to the broader issues of: (1) too much debt; (2) capital raise concerns; and (3) long-term cash generation and profitability. On the first two issues we believe OCA got the message and appears to be targeting a dramatic reduction in capex. Capex declined by ~-NZ$50m sequentially in 2H24, and we estimate investing cash flow for the next three years to be ~NZ$100m annually, half the previous three years. This will result in a substantial decline in new unit deliveries in FY26 and FY27, but the associated ~NZ$300m lower net debt is far more important for the investment case. With assets ~7x its market value of equity, lowering debt rather than growing assets should be the focus — profitability should follow. We reiterate our OUTPERFORM rating with an increased target price of NZ$1.00.
What's changed?
Earnings: Increased annuity EBITDA +2%/+5%/+3% and underlying earnings +12%/+18%/+1% over FY25/FY26/FY27
Target price: Increased to NZ$1.00, due to lower net debt and increased earnings offsetting lower dividends.
The Helier appears to be performing well — a young portfolio should command a higher earnings multiple
The most significant surprise versus our estimates was OCA's expectation to have recovered all capex for its flagship development, The Helier, by the end of FY25. OCA has fallen short on its expectations before, but this suggests a reduced tail risk. More broadly, 85% of OCA's book value of assets now come from sites developed or acquired since 2017. A young and not fully sold down portfolio under earns today but should deliver stronger growth going forward. We estimate that OCA has the lowest level of resales relative to independent living units (ILUs) and the largest gap between ILU new and resale prices in the sector. Both point to growth ahead.


Signs are accumulating that we are through the worst in care
OCA reported care EBITDA from ongoing operations ~+8% ahead of our estimates, up ~+15% year-on-year in 2H24. This was driven by a combination of daily care fees growing ahead of staff expenses for the first time since listing, and continued growth in DMF and resale gains. One swallow does not a summer make, but we forecast care margins to expand meaningfully from here.


The aged care companies have a credibility issue with regards to non-GAAP disclosure; OCA did not help itself
Non-GAAP measures make up ~80% to 90% of through the cycle ‘underlying earnings’ for the major listed aged care operators. Consequently, the quality, consistency and accuracy of these many non-GAAP disclosures is crucial. At 1H24 OCA stated that it had 409 new units ‘currently available for sale’ and 382 ‘additional units currently under construction’. As it turns out, rectified but not highlighted at this result, OCA counted ~100 units that were delivered in 2H24 in both categories.


If they really want to run the business around the market value of the equity....

Buy back the equity.

[Bikeguy]

Apologies Kiwical and Bikeguy for my reaction.

I agree with not needing to have a nuts and bolts deep understanding of every nuance of a business.

It's the part 'My main reason for buying OCA is the ageing population. Simple as that for me'! That got me going.

Seriously we need to be better than this, we need to think through the implications of things and ask 'and then what' for everything.

Identifying a trend such as an aging population or a market that is guaranteed to grow will give you no reason whatsoever in and of itself to make an investment and may actually in most cases be a negative thing. To understand why this is you need to study the base case rate for these things over time.

The only exception may be of you have identified a market or trend that others have not.

Generally speaking, if there is going to be an obvious growing demand for something, such as an ageing population, in a free market economy this will attract capital and resources This could be from a range of sources like a new retirement company IPO using the story of 'aging population' to entice 'investors', current listed companies competing for this increased demand and overbuilding, small retirement business owners expanding their facilities or starting a new small village - the list goes on. The obvious demand can be the death of the industry.

Do a study of the obvious demand coming into the commercial airline business in the mid 20th Century, the Auto industry... The THOUSANDS of bankruptcies and the three of four companies that made it and then THEY went bust too.

Look at mobile phones - demand obvious and the top dog Nokia... Well obvious.

There are so many bloody examples, why would you think this is different?

Aside from these points which BOOKS have been written about, let's touch on another more obvious point.

The future demographic characteristics are extremely well known and modelled, there is high quality data out there for all to see, we can even see different projections to include different immigration levels, different average lifespans etc.... So this is to say that it's NOT a reason to buy OCA due to the aging population as this is fully factored into the price you're paying as you dont have information the market does not.

The worst thing is thinking like this will actually also misprice the stock in the upwards direction meaning lower returns.

So to even say that the aging population is a reason to buy is bad enough. But to say that it's the main reason is sheer madness and then to insinuate that due to this profound insight you don't need to know much of the nuts and bolts as it's just 'this simple' - having the same insight as everyone else and expecting this to be a reason to buy...

I see in another post, you made a comparison with Japan, i.e. what has happened to the Japanese population... So did you then conduct a study on how this affected the aged care industry there? Did you look back to a time when they were faced with the aging population coming on, and see how the demand was met? Did buying retirement companies back then lead to incredible returns, average returns or low?

Well hell this was enough for me to put down the Sheet which I was rebuilding and issue a pretty harsh response.

Come on people - you have to EARN that money that you're investing, don't do stupid $hit. Think how many hours that it takes AFTER tax to obtain that money and maybe spend that amount of time thinking about things before investing it.

Don't go to all the effort of getting money and then being like 'ohhh myyyy, duhhhh NZ population is aging, I'll buy OCA - its that simple duhhhh...

Sorry but come on.

Apology accepted Salior, but not necessary, like I said your right to your opinion and to express your view in the way you choose is respected.

I enjoy hearing the views of others, I personally learn a lot from other peoples opinions.

[Balance]

What did Warren Buffett said about EBITDA as a measure of profitability?

https://www.inc-aus.com/jim-schleckser/warren-buffet-hates-ebitda-you-should-too.html

[Toddy]

What did Warren Buffett said about EBITDA as a measure of profitability?

https://www.inc-aus.com/jim-schleckser/warren-buffet-hates-ebitda-you-should-too.html

Anyone with who knows anything about business doesn't need Warren Buffett to tell them that cash is king.

That's why I find all of this behaviour around OCA exhausting. As soon as you get into heated debates around valuation methods and accounting rules then it's time to run.

The valuation on my Auckland house looks terrible compared to a few years ago. But I don't go piling more and more money into it because I think it is undervalued. No, I invest in other sectors that are giving returns today.

My point is this, is OCA really worth spending hours on trying to work out if its a good investment or not, when clearly there are better investments out there.

[winner69]

Anyone with who knows anything about business doesn't need Warren Buffett to tell them that cash is king.

That's why I find all of this behaviour around OCA exhausting. As soon as you get into heated debates around valuation methods and accounting rules then it's time to run.

The valuation on my Auckland house looks terrible compared to a few years ago. But I don't go piling more and more money into it because I think it is undervalued. No, I invest in other sectors that are giving returns today.

My point is this, is OCA really worth spending hours on trying to work out if its a good investment or not, when clearly there are better investments out there.

Cash is king

FY24 Cash burn was $78m …if include dividend it was $85m

[mistaTea]

Cash is king

FY24 Cash burn was $78m …if include dividend it was $85m

Yes, very difficult to predict the future cashflows of OCA from here I think, which is why the instos struggle to value it … and may well be on the conservative side?

Having said that, the business is currently valued over $1B when you take an EV lens so the ‘low’ market cap currently is a bit misleading.

The company may well do amazingly well in the future if they can get control of the debt and produce solid cashflows in the future.

Looks like the big players want to see debt come down a lot and management have got the message.

Investors buying today might do very well. But there are still a bunch of ifs and maybes, and we should be able to acknowledge that.

Some really solid points for the bull case. Also some really good considerations for caution.

And lots of shouting, swearing and put downs in the meantime! 🫣

[SailorRob]

Anyone with who knows anything about business doesn't need Warren Buffett to tell them that cash is king.

That's why I find all of this behaviour around OCA exhausting. As soon as you get into heated debates around valuation methods and accounting rules then it's time to run.

The valuation on my Auckland house looks terrible compared to a few years ago. But I don't go piling more and more money into it because I think it is undervalued. No, I invest in other sectors that are giving returns today.

My point is this, is OCA really worth spending hours on trying to work out if its a good investment or not, when clearly there are better investments out there.

Lucky for us both not near a laptop right now.

For gods sake todster.

[davflaws]

LOL.

If you weren't such an obvious social misfit, I may actually think of inviting you to my tropical seaside home.


Since Balance has posted links to both the Whitsundays and Vietnam when telling us about his tropical paradise, and so far refused to clarify where it is, I suspect it actually exists only inside his skull.

Anyone who chooses to join him there in his imaginary paradise will also expose their psyche to a toxic cauldron of visceral hatred, contempt, bigotry, and villification.

A pity, because his rational analyses are both informative and useful.

[Daytr]

Hi Day Trader, 64 pages back now, but I don't think you ever responded to this.

It's ok if you don't understand.

Nice try buddy.
I think there is a song written for you.
Desperado...

No need for further comment. I said it was included in the P&L & Ferg got nit picking with what part of the P&L.

But keep dreaming like OCA's positive reval.
I see RYM wrote down assets, hmmm I wonder which one I believe....

[SailorRob]

Apology accepted Salior, but not necessary, like I said your right to your opinion and to express your view in the way you choose is respected.

I enjoy hearing the views of others, I personally learn a lot from other peoples opinions.

They are not views or opinions...

Facts.

[ValueNZ]

That's why I find all of this behaviour around OCA exhausting. As soon as you get into heated debates around valuation methods and accounting rules then it's time to run.
Toddy, complicated accounting creates inefficiencies in markets which we can take advantage of. It's all about trying to determine the true economic reality of the business, ie the cashflows and the timing of those cashflows. If everyone knows what a business is worth then it'll be priced accordingly.

One example of complicated accounting creating inefficiencies I found last year was Jackson Financial (JXN nyse), an annuity company that used massive hedges on their policyholder liabilities. These hedges would create massive profits and losses under GAAP accounting rules, and each time this occurred the stock would skyrocket and plummet respectively. This is despite cashflows remaining steady, and the underlying business remaining fundamentally unchanged. So under GAAP, a conservatively run business looked like a casino, and as such as was priced accordingly. It's up about 100% since I posted about it last August.

[Toddy]

Maybe the reason I am not a fan is because I worked in Banking and Company Treasury Sections doing such accounting.

I have seen real live examples of when a company has had to unwind Swaps etc and pay USD Bonds back prematurely (thanks to a nice Cap raise from shareholder).
Not one of the syndicated Banks came even close to our Mtm. And the Bank offers were all over the place. Each bank used its own credit margins, break clause fees, discounted swap rates etc. But hey, the Company had to accept the offers.

I fully understand the concept and desired outcomes of such accounting. But it's definitely a theoretical world and lots of bean counters love it.

Just not me. The best thing I ever did was walk away from that world to farming.

[Joshuatree]

Since Balance has posted links to both the Whitsundays and Vietnam when telling us about his tropical paradise, and so far refused to clarify where it is, I suspect it actually exists only inside his skull.

Anyone who chooses to join him there in his imaginary paradise will also expose their psyche to a toxic cauldron of visceral hatred, contempt, bigotry, and villification.

A pity, because his rational analyses are both informative and useful.

Yes , I was living in his head rent free but had to bail due to the ooze.

[Poet]

NBR reporting that Ryman looking to raise fees and abandon its industry-low (2 year max) DMF. That's got to be good for sales at the other operators (OCA, I'm looking at you!)


On generating more revenue, Hamilton said Ryman expects to cut its “fixed-for-life" approach to fees which has “proved painful” in a high inflation environment. Ryman is also reconsidering its deferred management fee (DMF) – the amount of the purchase fee residents pay when they permanently vacate their units – for the village amenities they used during their stay. Ryman's DMF is currently capped at 20%, which is low by industry standards. “We simply haven't been able to recapture almost unprecedented rises in insurance and electricity [prices] and, to a lesser extent, labour,” Hamilton said.

[jagger]

The earnings call for me was brilliant, gave me more confidence than anything else. How they think about the business etc.

The most telling was the answer to 'why don't you sell assets to close the gap'

They think like Buffett.

Seriously, are you Brent himself?

[jagger]

Brent Pattison


We haven't lowered prices, no. And I know that's a question that's been on people's minds. It's actually been more of just about confidence. People love the product. Lots of people are sitting there waiting for a stabilization in market. It's less about their expectations of what they're going to get from their homes, because a lot of the homes are obviously in the $5 million, $6 million, $7 million range that they are selling.
They just want confidence that if they market and go through that change, that there's going to be a willing buyer on the other end. So it's actually been less about market prices and more actually about an incoming buyer. Are they going to be able to finance it. Are they going to be able to afford that financing at higher interest rates.
As Adrian moves us to hopefully lower interest rates towards the end of this year or early next year, then I just think that it will help with sentiment. So people love the product. People are happy with the price. People are happy with the services, but they need to see some confidence. And as people know, there's an abundance of listing. So eventually, the market will clear that abundance of listings.



I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

[mike2020]

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

I'm inclined to disagree. I just had this conversation regarding sales in a new area near home and some sales are done in a week and others in 12 months, but all the developers have held the line, and sales happen. If they all started cutting prices, I suspect not many extra sales, but margin would be the casualty.
Also, watching Hamilton right now I see huge numbers of new weekly listings, but prices are stable and probably improving and total listings are static and often dropping on weekly numbers, indicating turnover.
Another interesting (disturbing really) conversation recently was a real estate agency planning on increasing fees in July. I bet they can justify it to themselves but I feel it is a bit on the nose.

Anyway, OCA up for the day ARV SUM AND RYM all down. The market has spoken.

[jagger]

I'm inclined to disagree. I just had this conversation regarding sales in a new area near home and some sales are done in a week and others in 12 months, but all the developers have held the line, and sales happen. If they all started cutting prices, I suspect not many extra sales, but margin would be the casualty.

You suspect that there is no price elasticity of demand because property is different to every other good or service in existence or something or whatever.
Right.

Of course property developers are going to hold out because they only ever get one bite at the cherry on development margin when they create a product.

The difference with a retirement operator is that whatever they lose on development margin initially they will get back on resale gains at a later date when the market recovers.
In the mean time they should be aiming to accrue as much DMF as possible.

Brent banging on about cashflow positive developments and heroic development margins means absolutely didly squat if it's eating into his project IRR - he could sit on stock at The Helier for 5 years then puff his chest about 30% development margins and being a wizard, it would be meaningless.
He's got (or rather had, goneburger) a debt issue, sell the product and get cash in the door.

[winner69]

From the other channel this is what Craig’s noted

For OCA shares to begin to close the c.60% discount to adj NTA ($1.46), and
indeed to remain a going concern, cash generation from existing assets must
improve. With OCA consistently failing to deliver the improvement guided to
by management, it has become a "show me" story. We see the appointment
of new CEO Suzanne Dvorak (ex Bupa MD) as potentially a positive catalyst
for change, but she will need to deliver quick results to regain investor trust.
Retain Neutral, target price -10% to $0.67[/quote]

Bit of a worry if an analyst mentions ‘going concern’

[Lease]

From the other channel this is what Craig’s noted

For OCA shares to begin to close the c.60% discount to adj NTA ($1.46), and
indeed to remain a going concern, cash generation from existing assets must
improve. With OCA consistently failing to deliver the improvement guided to
by management, it has become a "show me" story. We see the appointment
of new CEO Suzanne Dvorak (ex Bupa MD) as potentially a positive catalyst
for change, but she will need to deliver quick results to regain investor trust.
Retain Neutral, target price -10% to $0.67

Bit of a worry if an analyst mentions ‘going concern’[/QUOTE]

OCA is able to sell their assets above book value. I reckon its going concern shouldn't be an issue.

[bottomfeeder]

Bit of a worry if an analyst mentions ‘going concern’

Pretty sure they werent referring to the definition as described in terms of insolvency.

[Balance]

Since Balance has posted links to both the Whitsundays and Vietnam when telling us about his tropical paradise, and so far refused to clarify where it is, I suspect it actually exists only inside his skull.

Anyone who chooses to join him there in his imaginary paradise will also expose their psyche to a toxic cauldron of visceral hatred, contempt, bigotry, and villification.

A pity, because his rational analyses are both informative and useful.

LOL.

You seriously think I would disclose on ST to the multitude of posters (unknown individuals to each of us all) where I have my tropical holiday home?

The photos are there to paint an image of what a tropical white sandy beach kissed by the warm clear ocean & sea waters is like. What i would say is that only a madman would buy a beach home in Vietnam or Cambodia - the communist regimes there can take away property rights with a stroke of the pen, backed up by the force of a gun!

And unlike your heroine, Clueless Cindy, who so indoctrinated the likes of you with spin and BS so that you cannot tell truth from lies any more, I do not need to spin and tell lies - only losers do.

[Balance]

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

Agreed. Many a developer has gone broke with that mindset of holding onto unrealistic selling prices. Amateur mindset.

OCA did very well (kudos) to lock in some really cheap interest rates which buys the company time.

But the clock is ticking as you rightly point out.

[jagger]

Agreed. Many a developer has gone broke with that mindset of holding onto unrealistic selling prices. Amateur mindset.

OCA did very well (kudos) to lock in some really cheap interest rates which buys the company time.

But the clock is ticking as you rightly point out.

Yup, rather than obfuscating and talking around the issue just be frank.
It's no secret the macro environment is tough, tell the market to suck it up for 18 months - the strategy is managing for cash, earnings will take a hit but that's only relatively short term.

Cash and residents (i.e. DMF) matter more now than holding out for development margin.
Recycle the cash, get the debt down and keep the pipeline going.

[Balance]

Yup, rather than obfuscating and talking around the issue just be frank.
It's no secret the macro environment is tough, tell the market to suck it up for 18 months - the strategy is managing for cash, earnings will take a hit but that's only relatively short term.

Cash and residents (i.e. DMF) matter more now than holding out for development margin.
Recycle the cash, get the debt down and keep the pipeline going.

Compare and contrast with what Ryman's CEO did today - bite the bullet, come clean and build from there.

This is a shocker from Ryman and indicative of how the players have been booking huge unrealised gains & deluding themselves and the market :

https://www.nzherald.co.nz/nz/ryman-healthcare-selling-former-victoria-university-karori-campus-after-company-profit-plummets/FVZEBKAZENEVZAO5BK5NE2UEFE/

So Ryman bought the Karori site for $28m (yes, $28m) in 2016 and now, they are writing the value of the land down by $37.6m? WTF!

Begs the question of how much revaluation ‘gains’ the site has yielded Ryman in the last 7 years before reality bit this year!!!!

No wonder the market has rightly not taken any heed of Ryman’s NTA backing or the NTA of OCA & ARV! So much smoke and mirrors.

[jagger]

No wonder the market has rightly not taken any heed of Ryman’s NTA backing or the NTA of OCA & ARV! So much smoke and mirrors.

I have no idea how a grifter from a real estate firm has managed to corner the market on valuing billions of dollars of listed assets.

[Baa_Baa]

That's an interesting description, a "grifter" is "a person who engages in petty or small-scale swindling". I looked it up grifter (https://www.google.com/search?client=safari&rls=en&q=grifter&ie=UTF-8&oe=UTF-8).

[jagger]

Yeah, it's appropriate and why I am perplexed.

Like if a real estate agent was suddenly in line to be nominated as auditor.

[allfromacell]

Compare and contrast with what Ryman's CEO did today - bite the bullet, come clean and build from there.

No wonder the market has rightly not taken any heed of Ryman’s NTA backing or the NTA of OCA & ARV! So much smoke and mirrors.

OCA has been able to sell 8 sites for an average price above book value over the last 12 months or so, with one additional site currently under contract.

[bull....]

arv to merge with oca .... you heard it here first lol

[winner69]

arv to merge with oca .... you heard it here first lol

Could happen bull …ARV hinting at something like that

But just imagine what a giant mess that would be …

[bull....]

Could happen bull …ARV hinting at something like that

But just imagine what a giant mess that would be …

lol yes an imagine the reporting

[jagger]

[deleted comment]

[SailorRob]

Toddy, complicated accounting creates inefficiencies in markets which we can take advantage of. It's all about trying to determine the true economic reality of the business, ie the cashflows and the timing of those cashflows. If everyone knows what a business is worth then it'll be priced accordingly.

One example of complicated accounting creating inefficiencies I found last year was Jackson Financial (JXN nyse), an annuity company that used massive hedges on their policyholder liabilities. These hedges would create massive profits and losses under GAAP accounting rules, and each time this occurred the stock would skyrocket and plummet respectively. This is despite cashflows remaining steady, and the underlying business remaining fundamentally unchanged. So under GAAP, a conservatively run business looked like a casino, and as such as was priced accordingly. It's up about 100% since I posted about it last August.


Very well done on JXN ValueNZ that is incredible. I took a look at the time and decided it was too complicated for me, I didn't have the time I needed to truly understand it. Which is exactly why the opportunity existed. Very similar thing happens with Berkshire as well.

[SailorRob]

What did Warren Buffett said about EBITDA as a measure of profitability?

https://www.inc-aus.com/jim-schleckser/warren-buffet-hates-ebitda-you-should-too.html


Well Sport, the link you posted did not tell us what he said. It just said he hated it without providing any evidence.

[nztx]

Could happen bull …ARV hinting at something like that

But just imagine what a giant mess that would be …


Add RYM to the threesome - would that solve all ills ?

Hopefully none of the participants show enthusiasm for getting adventurous with US bonds or things could get really wobbly :)

[Balance]

Well Sport, the link you posted did not tell us what he said. It just said he hated it without providing any evidence.

For an avid follower of Warren Buffett, I am surprised you are not aware of his views about EBITDA!

Munger actually went one step further and called EBITDA 'bull****' earnings!

https://www.youtube.com/watch?v=l82kIjqBtqw

[SailorRob]

Anyone with who knows anything about business doesn't need Warren Buffett to tell them that cash is king.

That's why I find all of this behaviour around OCA exhausting. As soon as you get into heated debates around valuation methods and accounting rules then it's time to run.

The valuation on my Auckland house looks terrible compared to a few years ago. But I don't go piling more and more money into it because I think it is undervalued. No, I invest in other sectors that are giving returns today.

My point is this, is OCA really worth spending hours on trying to work out if its a good investment or not, when clearly there are better investments out there.


So, Toddy... Buffett has never said cash is king and as with anyone who knows anything about business he understands and teaches that cash is the worst investment ever. This has been proven over time in all geographies in at least 2000 years of recorded history.

As ValueNZ has said, it is productive assets you want.

Perhaps you meant that 'making cash is king'

The next and far more serious mistake you have made is to conflate your house having gone down in value with the opportunity in OCA. Valuation has absolutely nothing to do with whether something has declined in market price or not. It is only related to the discounted net future cash flows.

Just because something has fallen in value does not mean that it is undervalued, or because it has risen that it is overvalued.

You are correct not to pile more and more money into your house because it is not undervalued. A proper analysis will tell you it's worth less than half of what you could sell it for. Either you or someone else will find that out the hard way.

Ok Toddy, time to man up and put your money where your mouth is.

You have stated that clearly there are better investments out there.

Name 3. Or even 2.

[SailorRob]

Well Sport, the link you posted did not tell us what he said. It just said he hated it without providing any evidence.


For an avid follower of Warren Buffett, I am surprised you are not aware of his views about EBITDA!

Munger actually went one step further and called EBITDA 'bull****' earnings!

https://www.youtube.com/watch?v=l82kIjqBtqw


Sport, can you show me where I said that I am not aware of his views about EBITDA?

Thanks

[SailorRob]

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.


Missing the forrest for the trees here.

It's not the 10% DMF they are missing out on that matters, they are missing out on something more significant than that.

[SailorRob]

You suspect that there is no price elasticity of demand because property is different to every other good or service in existence or something or whatever.
Right.

Of course property developers are going to hold out because they only ever get one bite at the cherry on development margin when they create a product.

The difference with a retirement operator is that whatever they lose on development margin initially they will get back on resale gains at a later date when the market recovers.
In the mean time they should be aiming to accrue as much DMF as possible.

Brent banging on about cashflow positive developments and heroic development margins means absolutely didly squat if it's eating into his project IRR - he could sit on stock at The Helier for 5 years then puff his chest about 30% development margins and being a wizard, it would be meaningless.
He's got (or rather had, goneburger) a debt issue, sell the product and get cash in the door.


Good post, I agree with this.

[SailorRob]

LOL.

You seriously think I would disclose on ST to the multitude of posters (unknown individuals to each of us all) where I have my tropical holiday home?

The photos are there to paint an image of what a tropical white sandy beach kissed by the warm clear ocean & sea waters is like. What i would say is that only a madman would buy a beach home in Vietnam or Cambodia - the communist regimes there can take away property rights with a stroke of the pen, backed up by the force of a gun!

And unlike your heroine, Clueless Cindy, who so indoctrinated the likes of you with spin and BS so that you cannot tell truth from lies any more, I do not need to spin and tell lies - only losers do.


Is this that timeshare in Costa Rica that you got scammed on?

[SailorRob]

From the other channel this is what Craig’s noted

For OCA shares to begin to close the c.60% discount to adj NTA ($1.46), and
indeed to remain a going concern, cash generation from existing assets must
improve. With OCA consistently failing to deliver the improvement guided to
by management, it has become a "show me" story. We see the appointment
of new CEO Suzanne Dvorak (ex Bupa MD) as potentially a positive catalyst
for change, but she will need to deliver quick results to regain investor trust.
Retain Neutral, target price -10% to $0.67

Bit of a worry if an analyst mentions ‘going concern’[/QUOTE]


Strongly agree.

It means the analyst has massive ignorance and is breaching fiduciary duty to clients.

[jagger]

Missing the forrest for the trees here.

It's not the 10% DMF they are missing out on that matters, they are missing out on something more significant than that.

No. I'm not.
And no, they're not.

Whatever they 'miss out' on today (fictitious development margin in this market) they will pick up on the first resale (if/when the market recovers).
In the meantime they are foregoing cash in the door earlier (i.e. paying more interest) and DMF which are ultimately cash flow, ultimately impact project IRR and, ergo, ultimately affect enterprise value.

[SailorRob]

No. I'm not.
And no, they're not.

Whatever they 'miss out' on today (fictitious development margin in this market) they will pick up on the first resale (if/when the market recovers).
In the meantime they are foregoing cash in the door earlier (i.e. paying more interest) and DMF which are ultimately cash flow, ultimately impact project IRR and, ergo, ultimately affect enterprise value.


I am not talking about the development margin, I am talking about the cash in the door early. Not the DMF... but the cash.

We are talking about the same thing.

[Baa_Baa]

Recent developments in the listed retirement sector are showing the kings who have no clothes.

OCA does not have to reduce debt, it is the only listed RV that has tons of low very low interest rate debt long dated. (and no I'm not talking about ORA liabilities that the company never has to generate the cash for repayment), I'm talking about development debt. But it seems to have fallen into 'analyst' sentiment that debt is too high, cashflow is too low, build rates are too aggressive, land banking is too soon. I say bullsh1t to all of that. Have you ever seen an 'analyst' who would be a better manager of the company that they analyse? Yeah nah.

This is a common theme lately, and imo it's well overdone, turning into alarmism. The most alarmed are those who don't have vested interest in any of them, and most don't seem to understand the business model either. Sadly those same people seem to have the most to say about RV's.

ARV has gone into distress mode, that was was a very concerning imo message to market that they will consider any pathway out of their current situation, including merging or sale! Like Balance said generally, this looks like a property developer who got caught out by the property market downturn, is leveraged upto the hilt and is distressed and likely to hit the wall if there's not a pivot to some other financial support.

RYM story is well known now, they have screwed up with their US debt, been forced to exit it with a massively dilution cap raise and are still marginal on debt coverage, cashflows and development build exposure. Just acknowledging the shift in accounting reporting is not going to shift the dial for RYM, they're in trouble and it's obvious. It would be a disaster if the largest RV in NZ came fully unstuck, but it's possible they will.

SUM continue to be the apparent sector darling, but they're hiding behind sector sales volumes that mask the underlying financial strength which is just as exposed as the other development intensive companies. Notice the flatline shareprice, the market is saying yeah good reporting but not so sure about whether to believe it all and how about the future?

Metlifecare and Bupa aren't listed. I suspect they are both feeling the pain as well.

Combined, these RV's hold a 48% share of the village market, which is almost two-thirds of all the country's retirement living units.

It is certainly not in the best interests of NZ for any of these RV's to fold, despite which ones you personally prefer to invest in, if any.

[SailorRob]

Recent developments in the listed retirement sector are showing the kings who have no clothes.

OCA does not have to reduce debt, it is the only listed RV that has tons of low very low interest rate debt long dated. (and no I'm not talking about ORA liabilities that the company never has to generate the cash for repayment), I'm talking about development debt. But it seems to have fallen into 'analyst' sentiment that debt is too high, cashflow is too low, build rates are too aggressive, land banking is too soon. I say bullsh1t to all of that. Have you ever seen an 'analyst' who would be a better manager of the company that they analyse? Yeah nah.

This is a common theme lately, and imo it's well overdone, turning into alarmism. The most alarmed are those who don't have vested interest in any of them, and most don't seem to understand the business model either. Sadly those same people seem to have the most to say about RV's.

ARV has gone into distress mode, that was was a very concerning imo message to market that they will consider any pathway out of their current situation, including merging or sale! Like Balance said generally, this looks like a property developer who got caught out by the property market downturn, is leveraged upto the hilt and is distressed and likely to hit the wall if there's not a pivot to some other financial support.

RYM story is well known now, they have screwed up with their US debt, been forced to exit it with a massively dilution cap raise and are still marginal on debt coverage, cashflows and development build exposure. Just acknowledging the shift in accounting reporting is not going to shift the dial for RYM, they're in trouble and it's obvious. It would be a disaster if the largest RV in NZ came fully unstuck, but it's possible they will.

SUM continue to be the apparent sector darling, but they're hiding behind sector sales volumes that mask the underlying financial strength which is just as exposed as the other development intensive companies. Notice the flatline shareprice, the market is saying yeah good reporting but not so sure about whether to believe it all and how about the future?

Metlifecare and Bupa aren't listed. I suspect they are both feeling the pain as well.

Combined, these RV's hold a 48% share of the village market, which is almost two-thirds of all the country's retirement living units.

It is certainly not in the best interests of NZ for any of these RV's to fold, despite which ones you personally prefer to invest in, if any.

Great post thanks Baa_Baa.

[mistaTea]

Spme chit chat in the other retirement operator forum (https://www.sharetrader.co.nz/showthread.php?11659-Retirement-village-operators/page147) that is specific to OCA.

[blackcap]

I have just done some preliminary numbers on OCA.

They are trading at a 60% discount to NTA. How is this even possible????

[mistaTea]

I have just done some preliminary numbers on OCA.

They are trading at a 60% discount to NTA. How is this even possible????

Because they don't earn any money and have high debt that is putting more pressure on as interest costs are set to keep rising.

[bull....]

I have just done some preliminary numbers on OCA.

They are trading at a 60% discount to NTA. How is this even possible????

nta is a useless thing to use to value a company. in a liquidation nta means nothing

[blackcap]

nta is a useless thing to use to value a company. in a liquidation nta means nothing

I get that. But does that not imply that the valuation (and audited) they use is actually very wrong. Should the auditor not pick up on that?

It makes a mockery of the whole NPAT as well. Annual revaluation creates profit/loss. It is a sad indictment on Accounting Standards et al.

[ValueNZ]

I have just done some preliminary numbers on OCA.

They are trading at a 60% discount to NTA. How is this even possible????
Now consider that NTA is actually well understated due to extremely conservative CBRE valuations and the nature of float accounting.

[Balance]

I get that. But does that not imply that the valuation (and audited) they use is actually very wrong. Should the auditor not pick up on that?

It makes a mockery of the whole NPAT as well. Annual revaluation creates profit/loss. It is a sad indictment on Accounting Standards et al.

It could be that the market is indeed wrong?

Usually a takeover will close the gap between nta and market value for example.

In this case, the level of debt would be a major deterrent to a takeover suitor.

[allfromacell]

nta is a useless thing to use to value a company. in a liquidation nta means nothing

NTA is a measurement of assets - debt, in a liquidation it's a very important metric?



Because they don't earn any money and have high debt that is putting more pressure on as interest costs are set to keep rising.

They increased their asset base by 237.4M (9.3%) in their last reporting period. They make plenty of profit, the issue is currently most of the profit is ending up on the balance sheet rather than cash flow. Lots of embedded value here that will come through as cash as they sell down.

If you strip out development investment and look at resales the company is profitable. This should become more obvious over the next 24 months as investment slows and stock is sold down (pent up demand anyone?)

Even if it isn't net profitable without new sales the amount of assets on the balance sheet means there is a large margin of safety buying the stock here.

[SailorRob]

Blackcap, OCA is not trading at anything like a 60% discount to NTA.

You are omitting the only asset that really matters...

The discount is more like 80%, I will calculate later.

NTA is not the way to look at this company, I have tirelessly explained this for 3 years.

[allfromacell]

I get that. But does that not imply that the valuation (and audited) they use is actually very wrong. Should the auditor not pick up on that?

It makes a mockery of the whole NPAT as well. Annual revaluation creates profit/loss. It is a sad indictment on Accounting Standards et al.

OCA has sold over 40M worth of assets (8 sites) over the past 12 months or so above book value.

[Daytr]

Recent developments in the listed retirement sector are showing the kings who have no clothes.

OCA does not have to reduce debt, it is the only listed RV that has tons of low very low interest rate debt long dated. (and no I'm not talking about ORA liabilities that the company never has to generate the cash for repayment), I'm talking about development debt. But it seems to have fallen into 'analyst' sentiment that debt is too high, cashflow is too low, build rates are too aggressive, land banking is too soon. I say bullsh1t to all of that. Have you ever seen an 'analyst' who would be a better manager of the company that they analyse? Yeah nah.

This is a common theme lately, and imo it's well overdone, turning into alarmism. The most alarmed are those who don't have vested interest in any of them, and most don't seem to understand the business model either. Sadly those same people seem to have the most to say about RV's.

ARV has gone into distress mode, that was was a very concerning imo message to market that they will consider any pathway out of their current situation, including merging or sale! Like Balance said generally, this looks like a property developer who got caught out by the property market downturn, is leveraged upto the hilt and is distressed and likely to hit the wall if there's not a pivot to some other financial support.

RYM story is well known now, they have screwed up with their US debt, been forced to exit it with a massively dilution cap raise and are still marginal on debt coverage, cashflows and development build exposure. Just acknowledging the shift in accounting reporting is not going to shift the dial for RYM, they're in trouble and it's obvious. It would be a disaster if the largest RV in NZ came fully unstuck, but it's possible they will.

SUM continue to be the apparent sector darling, but they're hiding behind sector sales volumes that mask the underlying financial strength which is just as exposed as the other development intensive companies. Notice the flatline shareprice, the market is saying yeah good reporting but not so sure about whether to believe it all and how about the future?

Metlifecare and Bupa aren't listed. I suspect they are both feeling the pain as well.

Combined, these RV's hold a 48% share of the village market, which is almost two-thirds of all the country's retirement living units.

It is certainly not in the best interests of NZ for any of these RV's to fold, despite which ones you personally prefer to invest in, if any.

Baa_Baa, if OCA doesn't have concerns over debt, why are they reducing their development portfolio?
Don't get me wrong I think it's the right thing to do, but it's obvious why they are doing it.

I question OCA's asset valuation as well. Seems pretty optimistic in the current market. Without the positive reval where would the profit be?

OCA need DMF just cover day to day losses. So a reduction in new sales due to a smaller book will hurt the future profitability & they will be relying on resales.

RYM have much more flexibility with their balance sheet than OCA, they have also taken the reval hit yet still reported a marginal profit.
RYM don't have to cover any day to day operation as they are profitable and are looking to increase fees & DMF in the future.
RYM to are looking to downsize their new builds, but have a more mature profile in regards resales & collection of DMF.

[bull....]

NTA is a measurement of assets - debt, in a liquidation it's a very important metric?




They increased their asset base by 237.4M (9.3%) in their last reporting period. They make plenty of profit, the issue is currently most of the profit is ending up on the balance sheet rather than cash flow. Lots of embedded value here that will come through as cash as they sell down.

If you strip out development investment and look at resales the company is profitable. This should become more obvious over the next 24 months as investment slows and stock is sold down (pent up demand anyone?)

Even if it isn't net profitable without new sales the amount of assets on the balance sheet means their is a large margin of safety buying the stock here.

the nta been inflated by there debt. if value's are re-priced down ( which other's are doing ) the current value of nta will be savaged cause of there debt position

[blackcap]

the nta been inflated by there debt. if value's are re-priced down ( which other's are doing ) the current value of nta will be savaged cause of there debt position

Yeah I too am very worries by their debt. If valuations drop then their position is quite dicey. Very highly leveraged, high interest rate environment and pressure on property prices is a recipe for disaster.

However, if OCA really did believe their valuations (and why should they not?) they the prudent thing to do, and there is a fiduciary duty to shareholders, they should liquidate all assets, pay off debt and proceed to distribute $1.41 to shareholders.

[ValueNZ]

Yeah I too am very worries by their debt. If valuations drop then their position is quite dicey. Very highly leveraged, high interest rate environment and pressure on property prices is a recipe for disaster.

However, if OCA really did believe their valuations (and why should they not?) they the prudent thing to do, and there is a fiduciary duty to shareholders, they should liquidate all assets, pay off debt and proceed to distribute $1.41 to shareholders.
Their fiduciary duty is to liquidate their assets for cents on the dollar to what their worth to shareholders? Really?

I'd be mad beyond belief if that happened.

[blackcap]

Their fiduciary duty is to liquidate their assets for cents on the dollar to what their worth to shareholders? Really?

I'd be mad beyond belief if that happened.

If their NTA is $1.41 and they are trading at $0.57 then surely shareholders are better off with $1.41 in the pocket that they can invest elsewhere?

[bull....]

Yeah I too am very worries by their debt. If valuations drop then their position is quite dicey. Very highly leveraged, high interest rate environment and pressure on property prices is a recipe for disaster.

However, if OCA really did believe their valuations (and why should they not?) they the prudent thing to do, and there is a fiduciary duty to shareholders, they should liquidate all assets, pay off debt and proceed to distribute $1.41 to shareholders.

the directors make up some of the nta valuation and some is done by experts

[SailorRob]

Man blackcap is dangerously out of control, just no idea of basic investment principles.

I'll leave it for you to educate this time ValueNZ.

If this is the level that people are at who actually go and post on a ST forum - what of the general public?

[blackcap]

Man blackcap is dangerously out of control, just no idea of basic investment principles.

I'll leave it for you to educate this time ValueNZ.

If this is the level that people are at who actually go and post on a ST forum - what of the general public?

Haha you are really quite emotional.

All I ask is a question that relates to Accounting Standards. What I want to know is how can NTA of a company be 1.41 as per the Annual Accounts, yet the share price trade at a 60% discount.

That implies a disconnect of sorts. Something is not right. I am trying to get to the bottom of this.

It is that simple.

[Daytr]

Their fiduciary duty is to liquidate their assets for cents on the dollar to what their worth to shareholders? Really?

I'd be mad beyond belief if that happened.

Cents in the dollar! 🤣🤣🤣
I can guarantee you if the banks were forced to take over there is no way the NTA will be anywhere near what is paid.
All the debtors will care about is they get their money back.
I assume bondholders rank behind the banks as well which wouldn't help.
Happy to stand corrected on that last comment.

[Rawz]

Man blackcap is dangerously out of control, just no idea of basic investment principles.

I'll leave it for you to educate this time ValueNZ.

If this is the level that people are at who actually go and post on a ST forum - what of the general public?

simmer down Sailor. If anyone is getting out of control it's you. Try keep calm with your responses. Saw you and your sidekick, ValueNZ, the other day digging back to 2020 finding one of Winners posts on a random company trying to sling mud and thus discredit his OCA analysis. Honestly you're looking a bit whacky

[SailorRob]

Im not the whacky one thinking that the discount to NTA is only 60%

Blackcap needs to think harder and by suggesting they liquidate to close the gap, I suggest he reads the earnings call I posted.

If they even think about doing that they need to be shot

[SailorRob]

Also blackcap why don't you run a screen over the NZX and indeed global markets and tell us what % of all companies trade for (as you put it) 60% discount to NTA?

Is it that unusual - come on do some work, give us the numbers.

[Balance]

OCA has sold over 40M worth of assets (8 sites) over the past 12 months or so above book value.

You keep mentioning these sales ($40m) as indicative of the valuations of the rest of OCA's other properties (over $2 billion).

Tail wagging the dog!

Plus like Ryman, OCA would have written down the value of the sites to realistic values before putting them on the market imo last year when it had to resort to selling assets, halting developments and stopped paying dividends.

And that's so easily done as OCA only reports one number for increase/decrease in fair value of properties.

[blackcap]

Im not the whacky one thinking that the discount to NTA is only 60%

Blackcap needs to think harder and by suggesting they liquidate to close the gap, I suggest he reads the earnings call I posted.

If they even think about doing that they need to be shot

NTA stands for Net Tangible Assets. As per the Annual Report this figure is $1.41.

Shares trade at $0.56

My simple math says that $1.41-$0.56 is $0.85.

Dividing $0.85 by $1.41 you get 60%. Thus that is the discount to NTA.

I don't really see any issues with this calculation.

[blackcap]

Also blackcap why don't you run a screen over the NZX and indeed global markets and tell us what % of all companies trade for (as you put it) 60% discount to NTA?

Is it that unusual - come on do some work, give us the numbers.

Trading at large discounts to NTA is very unusual. Most companies trade at premiums to NTA.

[Balance]

Also blackcap why don't you run a screen over the NZX and indeed global markets and tell us what % of all companies trade for (as you put it) 60% discount to NTA?

Is it that unusual - come on do some work, give us the numbers.

Shows that OCA's nta has no credibility.

[mistaTea]

simmer down Sailor. If anyone is getting out of control it's you. Try keep calm with your responses. Saw you and your sidekick, ValueNZ, the other day digging back to 2020 finding one of Winners posts on a random company trying to sling mud and thus discredit his OCA analysis. Honestly you're looking a bit whacky

Removed my post. Ad hominem attack, not necessary or warranted.

[SailorRob]

[QUOTE=Rawz;1054498 Saw you and your sidekick, ValueNZ, the other day digging back to 2020 finding one of Winners posts on a random company trying to sling mud and thus discredit his OCA analysis. Honestly you're looking a bit whacky[/QUOTE]


Hi Raws,

The company that 'Winner' was promoting was crystal clear going to fail and essentially the operators were acting against their fiduciary responsibilities, I clearly called it out and explained it at the time.

https://www.sharetrader.co.nz/showthread.php?11823-Me-Today-MEE&p=877431&viewfull=1#post877431

So for Winner to post about how it was guaranteed to be a 10 bagger and that he was guaranteed not to look stupid and whatever else he said, this can pull in other unsuspecting share trader members.

When as I predicted precisely, the share price, instead of going up 10x actually declines 99.5%, he must absolutely be called out on this and exposed for all to see.

If you're going to post stuff like that, then you will be held responsible.

So this must be considered in relation to his analytical abilities and current opinions of OCA.

Please read my post and ask yourself how anyone could have had a different view than the one I presented.

[SailorRob]

Trading at large discounts to NTA is very unusual. Most companies trade at premiums to NTA.


Not that unusual, give us the numbers.

I bought Citibank at a 50% to NTA recently... One of the biggest banks in the world.

Almost all Euro financials trade at MASSIVE discounts to NTA, in the 30's...

Almost all Hong Kong stocks also do.

It is extremely common.

If I get time I will screen the 50,000 public companies and give you exact numbers.

[Rawz]

Hi Raws,

The company that 'Winner' was promoting was crystal clear going to fail and essentially the operators were acting against their fiduciary responsibilities, I clearly called it out and explained it at the time.

https://www.sharetrader.co.nz/showthread.php?11823-Me-Today-MEE&p=877431&viewfull=1#post877431

So for Winner to post about how it was guaranteed to be a 10 bagger and that he was guaranteed not to look stupid and whatever else he said, this can pull in other unsuspecting share trader members.

When as I predicted precisely, the share price, instead of going up 10x actually declines 99.5%, he must absolutely be called out on this and exposed for all to see.

If you're going to post stuff like that, then you will be held responsible.

So this must be considered in relation to his analytical abilities and current opinions of OCA.

Please read my post and ask yourself how anyone could have had a different view than the one I presented.

I think everyone here knows that was a sarcastic post by winner.

Your post was good. Hope it stopped people buying in.

[SailorRob]

NTA stands for Net Tangible Assets. As per the Annual Report this figure is $1.41.

Shares trade at $0.56

My simple math says that $1.41-$0.56 is $0.85.

Dividing $0.85 by $1.41 you get 60%. Thus that is the discount to NTA.

I don't really see any issues with this calculation.


I see massive issues.

Don't just look at the books, actually think about the business, there is a lot more to it that you're missing.

If simple analysis of the accounts was going to work, please explain to me why VERY few if any accountants are good investors or wealthy

[blackcap]

I see massive issues.

Don't just look at the books, actually think about the business, there is a lot more to it that you're missing.

If simple analysis of the accounts was going to work, please explain to me why VERY few if any accountants are good investors or wealthy

I don't think accountants are good investors. (or bad for that matter)

I have a problem with the Accounting Standards if they can allow a 60% discount to NTA occur. .

I have issues with disconnects as there currently is one with OCA. The NTA figures cannot be realistic.

What is also interesting is that OCA is widely held. So would potentially be a good takeover target. This has not happened. I think for good reason.

[ValueNZ]

I think everyone here knows that was a sarcastic post by winner.

Your post was good. Hope it stopped people buying in.


Worth putting say $10,000 into I thought ....should be worth over $100,000 in a year or so.

Ecoya started of selling a few candles ....got some cash and acquired a back yard outfit in Trilogy ....and sold out for hundreds of millions.


Got to be early ...you never know

Off course punters will decry MEE for years ...makes life interesting

His shareholding (if held), is now worth $50. That's $99,950 off what he thought it would be worth. Yikes!

[mistaTea]

I don't think accountants are good investors. (or bad for that matter)

I have a problem with the Accounting Standards if they can allow a 60% discount to NTA occur. .

I have issues with disconnects as there currently is one with OCA. The NTA figures cannot be realistic.

What is also interesting is that OCA is widely held. So would potentially be a good takeover target. This has not happened. I think for good reason.

Yes, well with an EV north of $1B it is hardly 'cheap' given all of the other points that have been raised about debt, market conditions etc.

For the Board to be able to take an offer to shareholders for a vote, what would the premium need to be to the current SP? 20% at least?

So that would be an offer of $500M minimum.

Add the $640M loans the buyer would inherit and they have effectively paid $1.1B minimum to get a takeover over the line.

That is a lot of cheese to part with for a business that is struggling at the moment. Where is the margin of safety? To get the business to even double in value they would need to do it tough for a while to get debt way down and improve operational efficiency so the business actually pays its own way and does not rely on loans to top up OPEX etc.

To get to a $2B valuation it would need to go from where it is now to producing real earnings closer to $100M a year if we take a crude 20 PE ratio.

That could well happen under the right leadership, but there is a lot of risk to be factored in here too...and so it is perhaps not a suprise that cashed up investors have not flocked to get an offer in even though we are led to believe OCA has been way undervalued for the last two years.

[bull....]

Trading at large discounts to NTA is very unusual. Most companies trade at premiums to NTA.

look back at 2008 , some very big property companies were trading at very large discounts to nta like figure's you quoted and they still went bust. why mostly cause dirrectors , experts ettc were inflating the figure'sand they had to much debt

[blackcap]

look back at 2008 , some very big property companies were trading at very large discounts to nta like figure's you quoted and they still went bust. why mostly cause dirrectors , experts ettc were inflating the figure'sand they had to much debt

Totally.

But how can we allow these "inflated" figures onto balance sheets. Do auditors not have a responsibility?

I think the disconnect that this discount to NTA shows does the profession a disservice. Ie something needs to be done. Not sure if legislation is the right answer but something is not right.

On the other hand, a few years ago, CDI were putting their property developments on the books at cost, vastly undervaluing their NTA. Not sure that is the right approach either. But there needs to be a middle ground that investors can trust.

[Baa_Baa]

Haha you are really quite emotional.

All I ask is a question that relates to Accounting Standards. What I want to know is how can NTA of a company be 1.41 as per the Annual Accounts, yet the share price trade at a 60% discount.

That implies a disconnect of sorts. Something is not right. I am trying to get to the bottom of this.

It is that simple.

Are there any listed property development companies on NZX trading at or above NTA?

[percy]

Discount to NTA..........
......................Share price ............NTA................Disc to NTA.
ARV....................97 cents............$2.05...................52.68%
OCA....................57 cents............$1.41..................59.58%
RYM...................$3.78.................$6.01. .................37.10%.
SUM..................$9.55.................$11.10. .............. .14%
Property companies.
CDI.....................69 cents.............$1.08.................36.11%
NZL.....................89 cents..............$1.59................44.03%
KPG.....................81.5 cents...........$1.17.................30.34%
SPG....................$1.27...................$1. 78.................26.65%
PFI......................$2.145.................$2 .70................20.56%

[ValueNZ]

Does anyone know how the discount rate for the villages is determined? The range is 14-20%, with the median being 14.9%. This seems rather high to me, suggesting that they are understating what their assets are actually worth. A discount rate of 8%-10% in my mind would be more appropriate?

Has anyone here actually done a full DCF of one of the villages? I'd love it see it... Just so I can get my head around how these valuations actually are carried out in it's entirety.
Just coming back to this because no one answered my question and I'd like to wrap my head around this. What am I missing? 15% discount rate on cashflows seems very high.

[bull....]

Just coming back to this because no one answered my question and I'd like to wrap my head around this. What am I missing? 15% discount rate on cashflows seems very high.



should be based on the rate of return of the asset and pre tax wacc and compared to similar properties in the industry taking account that they have simiar rev , costs returns etc , i dont see the figure you quoted as unreasonable
.

thats the problem with the nta figure they get a expert to do a dcf on one and the n apply on all properties. as if there all the same lol ( obviously it take a lot of time to do it all individually and a lot of money that why they dont )

[kiwikeith]

Discount to NTA..........
......................Share price ............NTA................Disc to NTA.
ARV....................97 cents............$2.05...................52.68%
OCA....................57 cents............$1.41..................59.58%
RYM...................$3.78.................$6.01. .................37.10%.
SUM..................$9.55.................$11.10. .............. .14%
Property companies.
CDI.....................69 cents.............$1.08.................36.11%
NZL.....................89 cents..............$1.59................44.03%
KPG.....................81.5 cents...........$1.17.................30.34%
SPG....................$1.27...................$1. 78.................26.65%
PFI......................$2.145.................$2 .70................20.56%

Percy Your analysis will be very interesting to look back on in a couple of years. It may prove that now was a time when bargains were staring us in the face. You would think, that over the long run, the property companies would trade around Net asset value. One assumes they currently trade at a discount because the market thinks there is further trouble ahead (possibly more vacancies, further asset, writedowns, higher interest rates kicking in, tax changes etc).

[mike2020]

Im out a lot and the sheer number getting built by sum and rym is impressive.
The Hellier does seem like a bit of a white elephant

[Cupsy]

They increased their asset base by 237.4M (9.3%) in their last reporting period. They make plenty of profit, the issue is currently most of the profit is ending up on the balance sheet rather than cash flow.



This point here is what 99 percent of discussion on this thread should be centered around imo.

[SailorRob]

I think everyone here knows that was a sarcastic post by winner.

Your post was good. Hope it stopped people buying in.

Mate who are you trying to kid?

Winner started the thread and put up dozens of posts about how great it was and how soon it would ten bag.

Zero sarcasm...

[SailorRob]

Totally.

But how can we allow these "inflated" figures onto balance sheets. Do auditors not have a responsibility?

I think the disconnect that this discount to NTA shows does the profession a disservice. Ie something needs to be done. Not sure if legislation is the right answer but something is not right.

On the other hand, a few years ago, CDI were putting their property developments on the books at cost, vastly undervaluing their NTA. Not sure that is the right approach either. But there needs to be a middle ground that investors can trust.

Extremely disingenuous, I don't suppose you'll share with us your track record with equity investments over the years?

With this type of thinking you're doing yourself a massive disservice.

The balance sheet tells the wrong story as it shows a billion dollar asset as a liability. That's the issue not what you claim!

The NTA is far higher than what the accounts show.

[blackcap]

Mate who are you trying to kid?

Winner started the thread and put up dozens of posts about how great it was and how soon it would ten bag.

Zero sarcasm...

Don't be an idiot. Most of winner's posts have an element of wit or sarcasm about them. If you cannot see that or read between the lines......

[SailorRob]

Don't be an idiot. Most of winner's posts have an element of wit or sarcasm about them. If you cannot see that or read between the lines......

Mate, you think what you like.

I'll teach you one thing because I like you, you cannot tell the NTA value of something from market prices or the accounts.

The ONLY way is to discount the net future cash flows and apply your own rate.

This is ALL that matters.

Now do tell us about your prior success as an investor, have you outperformed cash?

[blackcap]

Mate, you think what you like.

I'll teach you one thing because I like you, you cannot tell the NTA value of something from market prices or the accounts.

The ONLY way is to discount the net future cash flows and apply your own rate.

This is ALL that matters.

Now do tell us about your prior success as an investor, have you outperformed cash?

Now your dealing in semantics. What is your definition of NTA?

My definition as most would take it, is book value of tangible assets - all liabilities divided by number of share.

If you want to make some valuation model of future cash flows, then sorry, that's not NTA. NTA is not an abstract where you can apply your own discount.

As at balance date, NTA of OCA is $1.41. End of.

[SailorRob]

Don't be an idiot. Most of winner's posts have an element of wit or sarcasm about them. If you cannot see that or read between the lines......

If we are to listen to what you say, we need to know when you've been correct in the past and when you've been wrong.

The best way to determine this is by your performance over time.

[SailorRob]

Now your dealing in semantics. What is your definition of NTA?

My definition as most would take it, is book value of tangible assets - all liabilities divided by number of share.

If you want to make some valuation model of future cash flows, then sorry, thats not NTA.

My definition of the value of an asset is what it can produce in cash.

Have a look at the net asset value of apple computers and tell me if it is correct?

[bull....]

Now your dealing in semantics. What is your definition of NTA?

My definition as most would take it, is book value of tangible assets - all liabilities divided by number of share.

If you want to make some valuation model of future cash flows, then sorry, that's not NTA. NTA is not an abstract where you can apply your own discount.

As at balance date, NTA of OCA is $1.41. End of.

bro im with the rob on this one. thats why i never go into detail just goes over the top of most people. not picking on ya but were talking RV's here

[SailorRob]

My definition as most would take it, is book value of tangible assets - all liabilities divided by number of share.

NTA is not an abstract where you can apply your own discount.

You were literally just saying that this is incorrect.

You stated that the NTA was wrong, auditors were to blame and the market was right.

So I'm bloody confused.

Anyway before we listen to all your ideas, what's your history?

[blackcap]

You were literally just saying that this is incorrect.

You stated that the NTA was wrong, auditors were to blame and the market was right.

So I'm bloody confused.

Anyway before we listen to all your ideas, what's your history?

I'm saying the quoted NTA figure is wrong. But it is what it is. Its the book figure in the balance sheet and the company can quote that. But the market is telling a different story. The market is saying NTA of OCA is a hell of a lot lower than the company is saying.

I am saying that valuations of assets, the methodology used and what the company puts them in their books at a certain point in time (ie 31 March) needs to be discussed and adjusted.

Or alternatively:

OCA are telling the market (via Annual Accounts) that they are worth $1,026 million.
The sharemarket is telling me that OCA are worth $405 million.

A rather large disconnect.

[SailorRob]

I'm saying the quoted NTA figure is wrong. But it is what it is. Its the book figure in the balance sheet and the company can quote that. But the market is telling a different story. The market is saying NTA of OCA is a hell of a lot lower than the company is saying.

I am saying that valuations of assets, the methodology used and what the company puts them in their books at a certain point in time (ie 31 March) needs to be discussed and adjusted.

And SailorRob is saying the NTA is a hell of a lot higher than what the company/accounts are saying.

And SailorRob has got his money where his mouth is.

[Cupsy]

But the market is telling a different story. The market is saying NTA of OCA is a hell of a lot lower than the company is saying.


I don't believe this is what the market is saying, imo the market is only interested in reported earnings, and I believe this is demonstrated in the market cap to NTA of sum and oca as a compared to each other.

[blackcap]

And SailorRob is saying the NTA is a hell of a lot higher than what the company/accounts are saying.

And SailorRob has got his money where his mouth is.

Good for you. If you think you know it so much better than mr Market well you must be a genius.

[SailorRob]

Good for you. If you think you know it so much better than mr Market well you must be a genius.

Thanks, but no genius. Not rocket science... Just learn how to think about the economic reality of the OCR liability and you're there.

[ValueNZ]

And SailorRob is saying the NTA is a hell of a lot higher than what the company/accounts are saying.

And SailorRob has got his money where his mouth is.
Company accounts are saying to discount cash flows at 15% P.A to determine investment property values.

That is far higher than any discount rate I would use, therefore making those assets more valuable to me.

Is this the right way of thinking about their assets Rob?

[SailorRob]

Company accounts are saying to discount cash flows at 15% P.A to determine investment property values.

That is far higher than any discount rate I would use, therefore making those assets more valuable to me.

Is this the right way of thinking about their assets Rob?

It is, but more what I'm getting at, is that I view (as you do) the ORA liability as the biggest and best asset.

So if you subtract it out, you're doing it all wrong.

Buffett would not sub it out, I'll guarantee that.

[Mrbuyit]

I guess it depends if an investor can get a yield from the ORA liability, historically parking money in OCA hasn't been great, has the story changed? it doesn't look like it.

it might be an OK investment in the future, but probably no rush to start buying in or accumulating in the short term.

the question around how much "froth" is in the valuations / NTA is an interesting one, perhaps (hopefully) less froth than RYM since there are not trying to drum up capital to prop things up.

[winner69]

Good for you. If you think you know it so much better than mr Market well you must be a genius.

Another stock this Mr Market doesn’t fully understand is Steel and Tube …STU

Buddy Rob was keen on them

[Balance]

“A wise man never know all but a fool always know everything”.

Keep that in mind when you are seeking knowledge and wisdom when making investments.

[SailorRob]

I guess it depends if an investor can get a yield from the ORA liability, historically parking money in OCA hasn't been great, has the story changed? it doesn't look like it.

it might be an OK investment in the future, but probably no rush to start buying in or accumulating in the short term.

the question around how much "froth" is in the valuations / NTA is an interesting one, perhaps (hopefully) less froth than RYM since there are not trying to drum up capital to prop things up.

Yeah great isn't how I'd describe it, it's been far better than great. Just look at how much more ORA the original ORA has produced to begin with.

STUNNING.

[SailorRob]

“A wise man never know all but a fool always know everything”.

Keep that in mind when you are seeking knowledge and wisdom when making investments.

Exactly right Balance.

It's not what you don't know that will hurt you, it's what you know for sure that just ain't so.

OCA capital raises and Synlait bonds come to mind...

[mistaTea]

Big thank you to Ferg for spending some time with me today to review the cashflows in more detail.

I get the limitation of trying to use CF now, given the DMF model and how ORA hits the bank account up front.

ORA's do pay for operating cost shortfall, but in line with DMF model... so the ~$400M used is to be expected.

Ferg can you please vouch for me that my brain does, in fact, function properly? :D

[Ferg]

Ferg can you please vouch for me that my brain does, in fact, function properly? :D
Functioning properly, yes your brain is.
/yoda

You're welcome. It's hard to fully explain the workings here but this sums it up nicely:

ORA's do pay for operating cost shortfall, but in line with DMF model.

[SailorRob]

Another stock this Mr Market doesn’t fully understand is Steel and Tube …STU

Buddy Rob was keen on them


Thanks for bringing this up Winner and I urge the OCA thread to take note of this as it's a great example of how Mr market can stuff things up massively as we are highlighting with OCA now.

Please see attached proof of my trades. Who else has ever provided proof of what they are saying?

All of this was highlighted in real time on the STU thread and lots of people followed me, a few from ST and many in real life as Cupsy will be able to attest.

In Feb 2020 just before Covid I did some detailed analysis on STU going back pre GFC and realised that it's a pretty solid business and was trading for a price that would give very good returns on conservative normalised earnings. I posted this on ST.

I took an initial position at 80c on the 13th and 14th of Feb and then sold half of it on the 02nd and 03rd of June at 65c to take advantage of better opportunity elsewhere.

On the 17th August, the price was 54c and I posted a concise but detailed analysis that you could buy STU totally free. Mr market had priced the business at a classic Grahamite NET-NET. So you could buy shares far below the value of NET working capital less ALL liabilities and get the business, the property, the vehicles etc for free. The working capital was mainly steel on the shelf.

This was impossibly good for a business I had already done the work on and I loaded up bigly on the 17th August 2020 at 54c.

On the 7th December 2021 I sold a few shares at $1.39 and then the bulk of them on the 17th Feb 2022 at $1.58 and the remainder on the 21st April 2022.

So for the bulk of my holding I returned 193% or a CAGR of 125%.

Hey 'winner', do you like apples cuz? Well how do you like dem apples?

15133

[SailorRob]

Big thank you to Ferg for spending some time with me today to review the cashflows in more detail.

I get the limitation of trying to use CF now, given the DMF model and how ORA hits the bank account up front.

ORA's do pay for operating cost shortfall, but in line with DMF model... so the ~$400M used is to be expected.

Ferg can you please vouch for me that my brain does, in fact, function properly? :D


Dude for the love of god I have been spelling this, in red above, out to you for Months if not years!

Which is proof to me that you're just using OCA to try and attack...

[mistaTea]

Dude for the love of god I have been spelling this, in red above, out to you for Months if not years!

Which is proof to me that you're just using OCA to try and attack...

Rob, come on mate - the only one on her attacking people is you.

You are your own worst enemy.

Anyway, Ferg has given me a lot to mull over. And I say thank ya.

[SailorRob]

Rob, come on mate - the only one on her attacking people is you.

You are your own worst enemy.

Anyway, Ferg has given me a lot to mull over. And I say thank ya.


Ok that's great, but to help me understand, can you comment on the fact that I have been hammering home in great detail and great frequency about the ORA hitting the bank account up front , and now you act as if this is the first you've heard of it?

That's what I don't get... It's the only reason I have any interest in OCA at all and why I despise the other listed property like Argrossy

[mistaTea]

Ok that's great, but to help me understand, can you comment on the fact that I have been hammering home in great detail and great frequency about the ORA hitting the bank account up front , and now you act as if this is the first you've heard of it?

That's what I don't get... It's the only reason I have any interest in OCA at all and why I despise the other listed property like Argrossy

No you are right about that and I did hear you mate. I understood about the ORA hitting it up front.

It’s just that I then muddied the waters trying to analyse the CF statement without remembering to take a portion of that ORA out.

Ferg was very patient with me and stepped through it all until the bit I was missing clicked into place. It is hard to explain some of the details over ST. Easier on the spreadsheet together.

If I was not genuinely interested Rob, I would not have just spent all this time with Ferg trying to clarify it all (I am not just trying to ‘attack’ anyone).

But I think this explains why you reacted so angrily to me? You thought I was just being wilfully ignorant and taking the p1ss?

[mistaTea]

Ok that's great, but to help me understand, can you comment on the fact that I have been hammering home in great detail and great frequency about the ORA hitting the bank account up front , and now you act as if this is the first you've heard of it?

That's what I don't get... It's the only reason I have any interest in OCA at all and why I despise the other listed property like Argrossy

I still love you Rob.

Even though you hurt me and constantly cheat on me.

[Baa_Baa]

@Ferg, well done for helping Mistatea understand the accounts. I agree that a discussion group is a poor forum for getting into the detail but I commend you on having consistently year after year shone light on the important insights and helped clarify the tricky stuff that is not clear to anyone other than professional analysts or learned investors. It is much appreciated and always helps with our own reconciliations with the accounts and conclusions as to the health of the company.

No one has ever said OCA accounts are easy to understand! What I would like to see is the listed RV's get together and the CFO's agree a common consistent accounting and reporting approach that can be documented in sufficient detail as to be transparent and understandable by mere mortals. But also summarised consistently in the same format by each of them respectively into something investors, analysts and insto's can easily consume, understand and compare.

I think that would do a good service for all of them. One shouldn't need to be a guru financial analyst to understand the financial health of the companies they invest in.

[SailorRob]

@Ferg, well done for helping Mistatea understand the accounts. I agree that a discussion group is a poor forum for getting into the detail but I commend you on having consistently year after year shone light on the important insights and helped clarify the tricky stuff that is not clear to anyone other than professional analysts or learned investors. It is much appreciated and always helps with our own reconciliations with the accounts and conclusions as to the health of the company.

No one has ever said OCA accounts are easy to understand! What I would like to see is the listed RV's get together and the CFO's agree a common consistent accounting and reporting approach that can be documented in sufficient detail as to be transparent and understandable by mere mortals. But also summarised consistently in the same format by each of them respectively into something investors, analysts and insto's can easily consume, understand and compare.

I think that would do a good service for all of them. One shouldn't need to be a guru financial analyst to understand the financial health of the companies they invest in.


What you are suggesting Baa_Baa would make it a hell of a lot harder for us to make a living. I hope it doesn't happen.

The more confusing the better and the more irrational the market is the better.

If everyone can easily consume understand and compare then we are Whangareid up the Puhoi well and truly.

[winner69]

Thanks for bringing this up Winner and I urge the OCA thread to take note of this as it's a great example of how Mr market can stuff things up massively as we are highlighting with OCA now.

Please see attached proof of my trades. Who else has ever provided proof of what they are saying?

All of this was highlighted in real time on the STU thread and lots of people followed me, a few from ST and many in real life as Cupsy will be able to attest.

In Feb 2020 just before Covid I did some detailed analysis on STU going back pre GFC and realised that it's a pretty solid business and was trading for a price that would give very good returns on conservative normalised earnings. I posted this on ST.

I took an initial position at 80c on the 13th and 14th of Feb and then sold half of it on the 02nd and 03rd of June at 65c to take advantage of better opportunity elsewhere.

On the 17th August, the price was 54c and I posted a concise but detailed analysis that you could buy STU totally free. Mr market had priced the business at a classic Grahamite NET-NET. So you could buy shares far below the value of NET working capital less ALL liabilities and get the business, the property, the vehicles etc for free. The working capital was mainly steel on the shelf.

This was impossibly good for a business I had already done the work on and I loaded up bigly on the 17th August 2020 at 54c.

On the 7th December 2021 I sold a few shares at $1.39 and then the bulk of them on the 17th Feb 2022 at $1.58 and the remainder on the 21st April 2022.

So for the bulk of my holding I returned 193% or a CAGR of 125%.

Hey 'winner', do you like apples cuz? Well how do you like dem apples?

15133

That was some return buddy …….buying at the bottom and selling at the top a true traders dream.

If you ran your special Grahamite NET.NET screen today would STU come out as one of the most undervalued stock in the whole world like it was back in 2020 …and we could have another trade and make heaps

[mike2020]

That was some return buddy …….buying at the bottom and selling at the top a true traders dream.

If you ran your special Grahamite NET.NET screen today would STU come out as one of the most undervalued stock in the whole world like it was back in 2020 …and we could have another trade and make heaps

I think we already know which stock he loves second at the moment. And to be honest I have found it reassuring reading the debate, if he had quit and shut up maybe even Ferg would have said nothing. I am happier to hold longer. I could never do that much analysis myself.

[bull....]

should be based on the rate of return of the asset and pre tax wacc and compared to similar properties in the industry taking account that they have simiar rev , costs returns etc , i dont see the figure you quoted as unreasonable
.

thats the problem with the nta figure they get a expert to do a dcf on one and the n apply on all properties. as if there all the same lol ( obviously it take a lot of time to do it all individually and a lot of money that why they dont )

hey value nz you havnt responded to my answer to your question. do you agree ? if not please provide your calculation

[SailorRob]

That was some return buddy …….buying at the bottom and selling at the top a true traders dream.

If you ran your special Grahamite NET.NET screen today would STU come out as one of the most undervalued stock in the whole world like it was back in 2020 …and we could have another trade and make heaps

No, but as I have highlighted it's worth around $1.50 to a normal person, so very good buying here.

No trading, I bought when undervalued and sold when it became too expensive for me and other better opportunities.

[SailorRob]

I think we already know which stock he loves second at the moment. And to be honest I have found it reassuring reading the debate, if he had quit and shut up maybe even Ferg would have said nothing. I am happier to hold longer. I could never do that much analysis myself.

OCA is still a relatively small position for me.

[bull....]

Thanks for bringing this up Winner and I urge the OCA thread to take note of this as it's a great example of how Mr market can stuff things up massively as we are highlighting with OCA now.

Please see attached proof of my trades. Who else has ever provided proof of what they are saying?

All of this was highlighted in real time on the STU thread and lots of people followed me, a few from ST and many in real life as Cupsy will be able to attest.

In Feb 2020 just before Covid I did some detailed analysis on STU going back pre GFC and realised that it's a pretty solid business and was trading for a price that would give very good returns on conservative normalised earnings. I posted this on ST.

I took an initial position at 80c on the 13th and 14th of Feb and then sold half of it on the 02nd and 03rd of June at 65c to take advantage of better opportunity elsewhere.

On the 17th August, the price was 54c and I posted a concise but detailed analysis that you could buy STU totally free. Mr market had priced the business at a classic Grahamite NET-NET. So you could buy shares far below the value of NET working capital less ALL liabilities and get the business, the property, the vehicles etc for free. The working capital was mainly steel on the shelf.

This was impossibly good for a business I had already done the work on and I loaded up bigly on the 17th August 2020 at 54c.

On the 7th December 2021 I sold a few shares at $1.39 and then the bulk of them on the 17th Feb 2022 at $1.58 and the remainder on the 21st April 2022.

So for the bulk of my holding I returned 193% or a CAGR of 125%.

Hey 'winner', do you like apples cuz? Well how do you like dem apples?

15133

im guessing you sold another loss maker to re- enter stu again at 54c and told yourself this was a better opportunity now ?

[SailorRob]

im guessing you sold another loss maker to re- enter stu again at 54c and told yourself this was a better opportunity now ?

Never guess bull s

[Daytr]

That deep value just got deeper in the last few days. 🤣
Giddy up!

[SailorRob]

That deep value just got deeper in the last few days. 🤣
Giddy up!

Yeah I had a quick look and pretty impressed how they have been going over the last few years.

[SailorRob]

OCA thread way more fun when folk don't believe in float.

[mistaTea]

OCA thread way more fun when folk don't believe in float.

What kind of a nut would argue against float.

[Baa_Baa]

OCA thread way more fun when folk don't believe in float.

Even more fun is that the market 'values' (prices) OCA at a paltry $398m market cap. Unbelievable, sitting on $2.8 billion total assets, + around ~$900m 'float', less debt at ~$600m (I can't be bothered looking up the exact numbers), and probably some other things to factor in, but wow, look at the delta between market cap and actual value.

Go figure, how is that even possible? Thank goodness for inefficient markets, it's a value investors dream.

[SailorRob]

Even more fun is that the market 'values' (prices) OCA at a paltry $398m market cap. Unbelievable, sitting on $2.8 billion total assets, + around ~$900m 'float', less debt at ~$600m (I can't be bothered looking up the exact numbers), and probably some other things to factor in, but wow, look at the delta between market cap and actual value.

Go figure, how is that even possible? Thank goodness for inefficient markets, it's a value investors dream.

That could be a ValueNZ post, I agree.

Huge margin of safety if assets are not even actually worth book...

[Daytr]

Even more fun is that the market 'values' (prices) OCA at a paltry $398m market cap. Unbelievable, sitting on $2.8 billion total assets, + around ~$900m 'float', less debt at ~$600m (I can't be bothered looking up the exact numbers), and probably some other things to factor in, but wow, look at the delta between market cap and actual value.

Go figure, how is that even possible? Thank goodness for inefficient markets, it's a value investors dream.

Plus $900M of float? Really?
Gawd you OCA fans love to double count various components, be it DMF, ORAs or 'float'.

What do you think the 'float' is invested in?
Assets, well you better hope that's the case as if the valuation of assets should be lowered, the debt doesn't, so just the NTA reduces by the same amount.

[winner69]

Rob and Snoopy discussing EBITDAF on the Contact thread

EBITDAF seems appropriate for likes of Oceania to use

Our Liz would be able to report EBITDAF of $14m ….down from $32m the year before

But Underlying NPAT of $62m sounds a lot better eh

[SailorRob]

Plus $900M of float? Really?
Gawd you OCA fans love to double count various components, be it DMF, ORAs or 'float'.

What do you think the 'float' is invested in?
Assets, well you better hope that's the case as if the valuation of assets should be lowered, the debt doesn't, so just the NTA reduces by the same amount.

No, not really, Gawd, he's wrong.

It's over a billion.

[SailorRob]

Rob and Snoopy discussing EBITDAF on the Contact thread

EBITDAF seems appropriate for likes of Oceania to use

Our Liz would be able to report EBITDAF of $14m ….down from $32m the year before

But Underlying NPAT of $62m sounds a lot better eh


It does, but I am leaning more towards total comprehensive income as the true measure of economic earnings and that's a lot higher again.

[Daytr]

No, not really, Gawd, he's wrong.

It's over a billion.

Speak to Ferg as $906M is the number he came up with I believe.

But anyway it's not plus the assets, it's included in what helped fund the assets along with debt.
It certainly wasn't profits.

[mistaTea]

Speak to Ferg as $906M is the number he came up with I believe.

But anyway it's not plus the assets, it's included in what helped fund the assets along with debt.
It certainly wasn't profits.

Yeah I think you are right about the double counting.

Though, given in practice that ORA number is likely to grow over time because, long term, the new ORA in more than replaces the ORA out…

I also don’t think you should DEDUCT that ORA ‘liability’ money from total assets either when trying to establish a NTA.

Do you agree?

[Daytr]

Yeah I think you are right about the double counting.

Though, given in practice that ORA number is likely to grow over time because, long term, the new ORA in more than replaces the ORA out…

I also don’t think you should DEDUCT that ORA ‘liability’ money from total assets either when trying to establish a NTA.

Do you agree?

It's not like they have $900M in cash sitting around, it's already invested in the assets.
So its not plus.
I suppose you would only deduct it if there was some major shift in the market like OCA had to pay out ORAs with or without a buyer.

It's funny when writing this, it reminded me of the definition of a Ponzi scheme. Using other people's money to pay existing investors out.
But in thus case it's legal, well perhaps until it isn't.

If that review came back and said ORAs had to be paid back with or without a buyer, how much cash would OCA need on standby? $100 - $150M?

[mistaTea]

It's not like they have $900M in cash sitting around, it's already invested in the assets.
So its not plus.
I suppose you would only deduct it if there was some major shift in the market like OCA had to pay out ORAs with or without a buyer.

It's funny when writing this, it reminded me of the definition of a Ponzi scheme. Using other people's money to pay existing investors out.
But in thus case it's legal, well perhaps until it isn't.

If that review came back and said ORAs had to be paid back with or without a buyer, how much cash would OCA need on standby? $100 - $150M?

Yes all valid points.

And I think we agree that you def cannot add the ORA amount to the total assets as that is double counting.

But under the current regime, do you also agree that we should not deduct the ORA amount from the total assets when trying to establish a NTA?

Because for all practical purposes, in the long, run that ORA ‘liability’ does not decrease (and probably increases).

[Daytr]

Yes all valid points.

And I think we agree that you def cannot add the ORA amount to the total assets as that is double counting.

But under the current regime, do you also agree that we should not deduct the ORA amount from the total assets when trying to establish a NTA?

Because for all practical purposes, in the long, run that ORA ‘liability’ does not decrease (and probably increases).

Technically you need to deduct it.
In practice it's up for debate.
It's a liability no doubt and if all goes to he'll in a handbasket then its a liability.
When investing always best to look at worst case scenario as that what banks do

[winner69]

If you take the number of sales/resales and average prices as in the preso you get total ORA sales of $267m

Cash Flow Statement says cash received from ORA sales was $226m

Is the difference those on the never never scheme or just a timing issue?

[mistaTea]

Technically you need to deduct it.
In practice it's up for debate.
It's a liability no doubt and if all goes to he'll in a handbasket then its a liability.
When investing always best to look at worst case scenario as that what banks do

Ok, yes I see.

So maybe as part of the Balance Sheet analysis for establishing one lens of intrinsic value…you do a couple of scenarios.

1. The worst case, it’s all gone to Hell…deduct the 70% ORA that would not be retained…(as unlikely as it may be)

2. The more ‘realistic’ case where, long term, that ‘liability’ is never actually paid out, and so we do not deduct anything.


And so you then end up with a range of NTA, from which you can compare current market cap + bank debt.

[Daytr]

Ok, yes I see.

So maybe as part of the Balance Sheet analysis for establishing one lens of intrinsic value…you do a couple of scenarios.

1. The worst case, it’s all gone to Hell…deduct the 70% ORA that would not be retained…(as unlikely as it may be)

2. The more ‘realistic’ case where, long term, that ‘liability’ is never actually paid out, and so we do not deduct anything.


And so you then end up with a range of NTA, from which you can compare current market cap + bank debt.

The way to look at it is for OCA to own 100% of what they deem as their assets is they have to payout 70% to get it.

The reason why they have the ORA 70% as a liability is that in the assets they treat as if they own 100% when in fact they only own 30%.

That's why the reval is so important as the liabilities won't change, they are fixed an not tied to valuation. However the assets are a different story. And to believe the NTA is correct is to believe the valuation on the assets is correct, as a 10% swing is worth $280M to the NTA

[mistaTea]

The way to look at it is for OCA to own 100% of what they deem as their assets is they have to payout 70% to get it.

The reason why they have the ORA 70% as a liability is that in the assets they treat as if they own 100% when in fact they only own 30%.

That's why the reval is so important as the liabilities won't change, they are fixed an not tied to valuation. However the assets are a different story. And to believe the NTA is correct is to believe the valuation on the assets is correct, as a 10% swing is worth $280M to the NTA

Maybe we run a few scenarios then, starting with the extremes.

1. Savage total assets by reducing it by some factor given the current economic challenges in property? 20%? Deduct ORA.

2. Take total assets as reported, no ORA deductions.

3. All the combinations in between.

4. Try to estimate a probability for each scenario (difficult).

I think if you took the first extreme option then NTA would not be much higher than current market cap + bank debt. No Graham margin of safety.

[Daytr]

Maybe we run a few scenarios then, starting with the extremes.

1. Savage total assets by reducing it by some factor given the current economic challenges in property? 20%? Deduct ORA.

2. Take total assets as reported, no ORA deductions.

3. All the combinations in between.

4. Try to estimate a probability for each scenario (difficult).

I think if you took the first extreme option then NTA would not be much higher than current market cap + bank debt. No Graham margin of safety.

Yep, it probably would, ballpark NTA of $700M.
But what if the assets have been overvalued? I find it strange seeing RYM taking write-downs when they have a large chunk in the Aussie market that is doing better than NZ and yet OCA revals higher.
So worse case they are overvalued by 20%, the market than capitulates or its a forced sale so another 20%.
Then your NTA is around $140M. It think that's extreme and unlikely to happen and a rival would probably pick them up if they can raise the cash, or private equity.
But if the banks take over, all they care about is their debt.

NTA isn't a great measure of value, though it's something, but its only realized in a worst-case scenario.
Its cashflow, profitable cashflow and the only thing that makes OCA profitable is sales & resales. DMF really only covers their day-to-day operational loss.
So, they are completely reliant on the property market functioning well and this is what you are buying into.

[SailorRob]

Hey once you guys have finally figured this out, and you are getting close it has to be said, what are you going to abuse SailorRob about?

I noticed the Berkshire abuse has stopped....

[Daytr]

MistaTea, if I was looking at investing in the sector I would probably spread my investment around. I prefer RYM as they actually make a profit day to day have a much more advanced profile and I like the exposure they have to the Australian market. But there's not much in it so I don't see why people wouldn't invest in a couple to spread their risk as what you are really buying into is the RV model. OCA has the biggest DMF and I am pretty confident that is what inspires the rabid fandom.

However, it looks like RYM are going to adjust their DMF and fees going forward so could make more money than they are now. A DMF to 25% for RYM is actually an increase of 25% of DMF income in the future. DMF for RYM was $140M this would increase to $175M plus its growing by around $20M a year through growth.

I might even look at ARV as potentially they are a takeover target but haven't looked at them closely.

[Daytr]

Hey once you guys have finally figured this out, and you are getting close it has to be said, what are you going to abuse SailorRob about?

I noticed the Berkshire abuse has stopped....

Mate it was figured out in about a day speaking to you months ago. Remember I kept saying it isn't rocket science....
What I acknowledge though are the risks, it's a long way from being a risk free money making scheme as you make out.
I also acknowledge that largely they are reliant on a performing property market, the DMF alone isn't going to do it especially when fees aren't covering the cost of running the villages.

It is rich of you to talk to anyone about abuse. You are the worst on here.

Anyway Sailorboy, enjoy your Saturday, it's a stunning one.

[SailorRob]

Mate it was figured out in about a day speaking to you months ago. Remember I kept saying it isn't rocket science....
What I acknowledge though are the risks, it's a long way from being a risk free money making scheme as you make out.
I also acknowledge that largely they are reliant on a performing property market, the DMF alone isn't going to do it especially when fees aren't covering the cost of running the villages.

It is rich of you to talk to anyone about abuse. You are the worst on here.

Anyway Sailorboy, enjoy your Saturday, it's a stunning one.

Saturday is just another day, no different to a week day for me...

[mistaTea]

Mate it was figured out in about a day speaking to you months ago. Remember I kept saying it isn't rocket science....
What I acknowledge though are the risks, it's a long way from being a risk free money making scheme as you make out.
I also acknowledge that largely they are reliant on a performing property market, the DMF alone isn't going to do it especially when fees aren't covering the cost of running the villages.

It is rich of you to talk to anyone about abuse. You are the worst on here.

Anyway Sailorboy, enjoy your Saturday, it's a stunning one.

Yeah not a bad approach.

First I need to see if I can even work out what it is worth though 😅

Institutions say $400M + debt.

[SailorRob]

Yeah not a bad approach.

First I need to see if I can even work out what it is worth though 😅

Institutions say $400M + debt.

Remember, you don't need to be able to figure out what it's worth.

You only need to know what it ain't worth which is 55c.

[mistaTea]

Remember, you don't need to be able to figure out what it's worth.

You only need to know what it ain't worth which is 55c.

Yeah that is fair.

Although it would be best I think to come up with a range of likely IV so that you can assess how much above current market cap it is (assuming it is above market cap) to establish if you want to invest in OCA or some other opportunity.

[Rawz]

Remember, you don't need to be able to figure out what it's worth.

You only need to know what it ain't worth which is 55c.
That is absurd.

You can’t truly believe that. No way?

All my investments I have a target price for exit and hold until it’s above that

[mistaTea]

That is absurd.

You can’t truly believe that. No way.

You can work backwards from current market cap and establish what the long term earnings would need to be to justify the current valuation.

And then if that earnings profile seems very low to you, it is possible to establish that the company is probably worth more (without know exactly how much more).

I would not advocate for that approach though.

[ValueNZ]

That is absurd.

You can’t truly believe that. No way.
That's a very reasonable approach to valuation.

Calculating a specific number is dependent on many variables, so guessing what those variables are can be very difficult and leave you with no room for error. But if you assume the worst case scenario in all variables and get a valuation higher the market price + a margin of safety, then you can feel very comfortable knowing you're buying at low risk.

[ValueNZ]

All my investments I have a target price for exit and hold until it’s above that
Surely you must account for the time value of money?

I.e a moving target price to exit.

[mistaTea]

That's a very reasonable approach to valuation.

Calculating a specific number is dependent on many variables, so guessing what those variables are can be very difficult and leave you with no room for error. But if you assume the worst case scenario in all variables and get a valuation higher the market price + a margin of safety, then you can feel very comfortable knowing you're buying at low risk.

I think ultimately you try to come up with a reasonably tight range.

If your assumptions are all over the place and you end up with a valuation range of $500M - $5B then you take a pass. Because you don’t understand it well enough.

If, on the other hand, you do understand the business/sector and feel confident in your assumptions…if you end up with a range of, say, $2B - $2.5B or even $3B…

Well then you can buy an EV of $1B with confidence.

[winner69]

I think ultimately you try to come up with a reasonably tight range.

If your assumptions are all over the place and you end up with a valuation range of $500M - $5B then you take a pass. Because you don’t understand it well enough.

If, on the other hand, you do understand the business/sector and feel confident in your assumptions…if you end up with a range of, say, $2B - $2.5B or even $3B…

Well then you can buy an EV of $1B with confidence.

In this case shouldn’t Enterprise Value include the float?

[ValueNZ]

If your assumptions are all over the place and you end up with a valuation range of $500M - $5B then you take a pass. Because you don’t understand it well enough.

Here's the thing. Some securities are impossible to get a tight range, because they depend on factors which are difficult to predict with any certainty. But you don't need a tight range to do well, you just need to know what it's worth at a minimum. That's why Rob's STU investment worked out so well for him, even if he didn't know exactly what it was worth, he knew it was worth at a minimum it's net current assets.

[mistaTea]

Here's the thing. Some securities are impossible to get a tight range, because they depend on factors which are difficult to predict with any certainty. But you don't need a tight range to do well, you just need to know what it's worth at a minimum. That's why Rob's STU investment worked out so well for him, even if he didn't know exactly what it was worth, he knew it was worth at a minimum it's net current assets.

Ok, I take your point.

[mistaTea]

In this case shouldn’t Enterprise Value include the float?

You mean, market cap + bank debt + ORA?

[winner69]

You mean, market cap + bank debt + ORA?

Yep, what you say

[mistaTea]

Yep, what you say

You can add it in for a conservative view. In which case EV is, what, ~$2B?

I think we have (mostly) agreed though that the ORA liability is never actually paid back though.

Whereas the bank loan must be paid back.

So I would tend to omit ORA in the EV calc for our purposes.

But I stand to be corrected.

[SailorRob]

That is absurd.

You can’t truly believe that. No way?

All my investments I have a target price for exit and hold until it’s above that

Thank you ValueNZ for explaining basic principles to another person who doesn't get it.

If course I don't know what it's worth. To know that, amongst other things, I'd need to know the earnings over the next 30 years, I'd need to know future inflation and interest rates, my own opportunity set and my own discount rate, which will be different to anyone else.

Buffett and Munger had different values for Berkshire.

Rawz, if you think this is so absurd and that you can value businesses, how about you share your last 10 years of returns with the forum so we can judge what you're saying?

I didn't think so.

Perhaps contact ValueNZ who can give you private tutoring.

[SailorRob]

To me it's worth something north of $2 a share, that's all I need to know really. And if I had to get more precise then it would be upwards of that not down.

But to almost everyone else, that's impossible as the share price is 55c.

You all better be glad you don't own private businesses. Without a quote you'd be totally lost.

[mistaTea]

To me it's worth something north of $2 a share, that's all I need to know really. And if I had to get more precise then it would be upwards of that not down.

But to almost everyone else, that's impossible as the share price is 55c.

You all better be glad you don't own private businesses. Without a quote you'd be totally lost.

How do you arrive at the minimum market cap of $1.5B?

Based on assumptions on likely increase in total asset value net of debt?

Doing a DCF is impossible I think for the reasons you pointed out earlier. And as Munger once said, he never once saw Warren do one.

[Cupsy]

NTA isn't a great measure of value, though it's something, but its only realized in a worst-case scenario.
Its cashflow, profitable cashflow and the only thing that makes OCA profitable is sales & resales. DMF really only covers their day-to-day operational loss.
So, they are completely reliant on the property market functioning well and this is what you are buying into.

From section 3.1 and 3.2 of the AR, I thought the valuations are from a discounted rate or dcf method? So based on cash earned and not "only realized in a "worst-case" scenario"?.
And I question your comment about them being completely reliant on the property market functioning well, as average occupancy periods are something like 7 years? Can you explain your point in more detail?.

[winner69]

How do you arrive at the minimum market cap of $1.5B?

Based on assumptions on likely increase in total asset value net of debt?

Doing a DCF is impossible I think for the reasons you pointed out earlier. And as Munger once said, he never once saw Warren do one.

The secret key assumption Rob made is ‘to me it’s worth …..’

Need nothing more than that conviction

[ValueNZ]

The secret key assumption Rob made is ‘to me it’s worth …..’

Need nothing more than that conviction
That's because the discount rate used varies from person to person for obvious reasons.

What is Me Today worth to you?

[winner69]

That's because the discount rate used varies from person to person for obvious reasons.

What is Me Today worth to you?

What’s this Me Today you talk about?

[SailorRob]

How do you arrive at the minimum market cap of $1.5B?

Based on assumptions on likely increase in total asset value net of debt?

Doing a DCF is impossible I think for the reasons you pointed out earlier. And as Munger once said, he never once saw Warren do one.

Warren did them all the time, just in his head and in basic terms.

[ValueNZ]

What’s this Me Today?
A stock you claimed you bought in 2020, you said "worth putting 10k in I reckon" which has now lost 99.5% of it's value.

[SailorRob]

What’s this Me Today you talk about?

He means the company you pulled everyone into by assessing it as a guaranteed 10 bagger, that subsequently lost 99.5% of its value, well that's not true as never had any value to begin with.

[winner69]

Warren did them all the time, just in his head and in basic terms.

Cash flow is a fact while profit is an opinion

[Rawz]

To me it's worth something north of $2 a share, that's all I need to know really. And if I had to get more precise then it would be upwards of that not down.

But to almost everyone else, that's impossible as the share price is 55c.

You all better be glad you don't own private businesses. Without a quote you'd be totally lost.

Sailor: you don’t need a target price. Thank you ValueNZ for explaining that for me. If you have a target price show me 10 years of returns or your view is worth nothing.

Also sailor: to me it’s worth $2 lol..

[Daytr]

From section 3.1 and 3.2 of the AR, I thought the valuations are from a discounted rate or dcf method? So based on cash earned and not "only realized in a "worst-case" scenario"?.
And I question your comment about them being completely reliant on the property market functioning well, as average occupancy periods are something like 7 years? Can you explain your point in more detail?.

Well it's relying on a buyer at the same level or higher for the resale.

[Balance]

So much garbage being written by the usual!

Amazing!

[ValueNZ]

So much garbage being written!

Amazing!
Lets hear it Balance.

What here is garbage.

[Rawz]

Here's the thing. Some securities are impossible to get a tight range, because they depend on factors which are difficult to predict with any certainty. But you don't need a tight range to do well, you just need to know what it's worth at a minimum. That's why Rob's STU investment worked out so well for him, even if he didn't know exactly what it was worth, he knew it was worth at a minimum it's net current assets.

The only reason sailors STU bet worked out so well is because he exited the dog at $1.50.

Don’t let him fool you he doesn’t have an exit price on OCA

[Daytr]

Lets hear it Balance.

What here is garbage.

Too longer a list. 🤣

[ValueNZ]

The only reason sailors STU bet worked out so well is because he exited the dog at $1.50.

Don’t let him fool you he doesn’t have an exit price on OCA
His exit price will be when a better opportunity presents itself.

This is how all intelligent people think about investments. They don't set some arbitrary price target. They think of it in terms of opportunity cost and forward returns.

How silly is that. "If stock X hits $56.62, I'll sell it", with no regard to the alternatives.

[Rawz]

His exit price will be when a better opportunity presents itself.

This is how all intelligent people think about investments. They don't set some arbitrary price target. They think of it in terms of opportunity cost and forward returns.

How silly is that. "If stock X hits $56.62, I'll sell it", with no regard to the alternatives.
It’s not silly at all. W Buffett sells all the time to cash. You don’t need another opportunity. You just need to know what you are holding is overvalued

[Rawz]

ValueNZ don’t fall in love with OCA

[ValueNZ]

You don’t need another opportunity. You just need to know what you are holding is overvalued
What you don't understand is by calling something "overvalued" you imply the existence of a better opportunity.

[SailorRob]

ValueNZ don’t fall in love with OCA

If there is one thing I am sure of, that is that ValueNZ does not need advice from you.

[Rawz]

If there is one thing I am sure of, that is that ValueNZ does not need advice from you.

Maybe. Every STr member has something to offer.

(Apart from X-men)

[Daytr]

If there is one thing I am sure of, that is that ValueNZ does not need advice from you.

Yeah just yours eh.

[mistaTea]

Man we were doing so well in earlier, discussing OCA…sharing ideas on how we can look at value, things to look out for.

How does the conversation literally always deteriorate into fighting? Every time.

lol.

[SailorRob]

Maybe. Every STr member has something to offer.

(Apart from X-men)


No doubt you could teach him something, just saying he'd be ok without as well.

Great call on X-men, you're bloody right about that. Well actually they offer us evidence that we share the marketplace with complete morons who are also cretins.

[SailorRob]

[

It’s not silly at all. W Buffett sells all the time to cash. You don’t need another opportunity. You just need to know what you are holding is overvalued


His point is that to know it's overvalued, it MUST be overvalued in relation to something.

If it was trading at 100 times earnings in a world of negative yielding corp bonds, it may not be overvalued.

[SailorRob]

The only reason sailors STU bet worked out so well is because he exited the dog at $1.50.

Don’t let him fool you he doesn’t have an exit price on OCA


I have not even thought about it. But of course at some price I would sell. No idea what that is, not even ball park.