I sold two thirds of my holding last year at prices from $1.59 down to $1.31. I put that into cash and its still there.
Would I sell the remaining one third free carry stake at the current price ? - Absolutely Not.
Would I buy more at the current price ? No, not yet. I need to see some encouragement on a TA basis that the ~ 6 month downtrend has finished.
What really disappointed me last year was assurances given by Earl Gasparich in the half year call of 22 January 2021 telling analysts and listeners that he believed in future that the cost of care would move in line with Government funding. It didn't and the rampant rate of human resource cost increase under his watch ever since it listed continued right through 2021.
Can our new CEO turn this around or does the culture of the company run so deep that he gets sucked into the vortex of all that matters is providing first class care irrespective of cost and without cost restraint of any kind and shareholders are little more than an inconvenience to be tolerated. As a shareholder I sometimes feel like I'm little more than a quasi employment agent and philanthropist with this company giving away all the business transformation gains to others and getting left with crumbs.
What I want to see and am hoping to see from Brent is a more communicative style to shareholders with quarterly updates in between the half year reporting, leaning in more on new developments with a much higher level of independent living and a more fulsome level of facilities, (model this off the new Hobsonville village they purchased please) as this is a proven formula that's worked very well for Summerset and Ryman.
There is no concrete earnings evidence after nearly 5 years that OCA's business model works well for shareholders, (all we have is talk) so I believe they need to adapt this going forward as the cost of a high care business model is going to be a systemic headwind, (handbrake on company growth) forever and a day.
The first clue to find out whether they are going to be agile and adaptive is their new greenfield development at Pukekohe. If plans when revealed, still revolve around a high level of care units I will see this as a sign the company are not adapting to the tremendous cost pressures involved in providing care. If that's the case my capital is probably better off invested elsewhere over the long run.
There is a reasonably widely held view in the investment community that in times of high inflation "cash is trash". I disagree and believe that cash in hand has two key advantages in times of extreme market volatility.
1. It confers tremendous peace of mind and acts like a shock absorber cushioning the volatility in your portfolio.
2. It confers the advantage of great optionality around buying shares in the future at cheaper prices.