Snoopy has made the most logical attempt from what I have seen so far at an explanation for that all important counterfactual we need to round out the case for buying into (or not) OCA.
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Snoopy has made the most logical attempt from what I have seen so far at an explanation for that all important counterfactual we need to round out the case for buying into (or not) OCA.
Talk about taking heed to the market...
Imagine for a second that OCA wasn't a publicly listed stock, what would you be willing to pay for the whole company? And is that lower than the current market cap? Those are the two questions you should be asking yourself before investing in anything.
May I suggest you have another read of Lyall Taylor's blog on the pricing of property
https://lt3000.blogspot.com/2020/07/...flywheels.html
The question you ask ValueNZ is a good one. And the answer for me is yes, if OCA was not listed, I would pay a lot more for it than the price those OCA shares trading on the market indicate the company is worth today. But the elephant in the room that you are ignoring is that OCA *is* listed. And if I have transposed Lyall Taylor's blog logic to OCA correctly, his view would be that it is the 'state of being listed', and the competitive investment opportunities that potential OCA share buyers have, that is keeping the share price low at around half of the net asset backing. And while OCA remains listed, this won't change.
SNOOPY
You are still struggling to grasp the issue, and are conflating two different things.
At no point did I say that you need to agree with the markets assessment. Snoopy had just provided a rationale as to how the market may be viewing OCA, setting the price etc.
You may think trust the market is mistaken for doing so, and good on you. Continue to build your investment by all means.
You guys keep taking alternative propositions as a direct attack. Nobody is attacking you.
Lyall is 100% correct in what he says. Go look at Agrosy thread and I've said the same many times but nobody could understand.
But, this ain't Agrosy.
Snoopy me ol’ mate, I get the feeling that most on here don’t get (or want to get) what you are saying
Aren’t you just answering why are OCA shares always so ‘cheap’ / ‘undervalued’ …ie share price doesn’t represent a ‘true’/‘realistic’ value …and you add that this is unlikely to change
Looking backwards you can say that Mr Market must have been an irrational drunk. But having lived through those Covid-19 times, I am not so sure. At the time of OCA hitting 40c, Covid-19, the more deadly original strain, was rampant in other parts of thew world, There were no vaccines, nor medical treatments available and refrigerated containers were being stacked with Covid dead bodies in the United States. So it was quite conceivable that if Covid-19 had become established in NZ in those early days, entire retirement villages could have lost all of their residents, while it would be a battle for the staff to remain well enough to operate them. That means 40c for OCA might not have been irrational.
Likewise with interest rates near zero, even a meagre 3% return on assets was looking OK. So there was a very logical reason why retirement village shares might trade at near to NTA. It is only looking back on the situation when you realise that both the 40c and $1.60 Mr Market valuations were transient outlier scenarios. But they certainly did not feel that way at the time. My guess is that transient outliers aside, the value of OCA shares did not change much from that median value you pointed to of 68c. And OCA is probably still worth round about that figure today.
SNOOPY