He was talking about his yacht a while ago. ..probably a huge one funded by debt
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At present the debt is good, at low rates. But when it matures it will have to be re-issued. You go make your stacks of cash. Why is there such a large discount to NTA in this stock? You obviously know something more than I do. Anyway, I will be talking to Liz Coutts at some stage in the next month so will ask her myself.
The bank and bond debt, 500 million against total assets of 2.6 billion.
You are thinking the refundable occupational rights agreements and the deferred management fees are debt...
They are in fact an asset that is better than equity capital.
So do your calculation again with the 500 debt against equity plus the ROR and DMF and see how good it looks then.
Liz will explain it, or I can if you want but I've been highlighting it for so long... hence the frustration.
The discount to NTA is because virtually nobody understands the float and they think this business is like Argosy or something.
Sailor may I suggest you swap the rum for weed lol
I do think I can understand what gives SR confidence about his calculations of OCA dynamics ...as he treats OR deposits as interest free gift / not even loan ..means OR deposits will never need be refunded till company finds another replacement also they never need provide any returns for them ...company is free to use them any way they like ie to make more units thus so on ...a time will come when this cycle will gain enough momentum on its own to self fund development and free cash flows ...all good ...but if thats so simple then why whole market not getting the golden goose analogy ...this part fails me ...maybe I am not well trained in accounts or RV accounts which Mr B used to say needs skills of a forensic accountants at times to fully understand the layers ...
Good post yep, I agree the income statement is complex with these companies but the balance sheet is not.
Why doesn't the market get it, good question, I guess some of the others have proved the model and I guess even a interest free loan which has no conditions attached and only has to be paid back once refinanced with another free loan... if you used this money to buy yachts then it's still bad even though it's free, so they need to prove they can use the free money to make money.
Plenty of companies you can lend them a billion dollars interest free against a similar amount of equity capital and they will still screw up.
BUT, what does interest me is how OCA trades in lockstep with the BS property companies that DONT have access to this free funding, and this more than anything else proves to me that the market doesn't get it.
Apologies to Blackcap, if you have not thought about this aspect of the funding in this way, I am happy to explain it as I see it.
But using a traditional debt/equity ratio for this company is just crazy, it just doesn't work like that.