OCA - Oceania Healthcare

[Administrator]

Keep it civil people I'm still watching

[Popeye]

Argh ha, as this is the OCA thread I will keep it to OCA. Everyone is entitles to there views and philosophy on investments.

Sadly for Beagle/Basil as he continues to stick it up those who don't agree with him.

Funny he hates For Bar analysis except whern it agrees with his. You followers are welcome to it, hope he doesn't lead you off the cliff.

I did not mean to stir up a hornets nest or anything.  All I meant was there are a number of commenters on this MB worth reading carefully, and Basil is definitely one of them. 

Personally, I can cope with someone switching tack on their investment theses, even 180 degrees.  On a forum like this there is the open opportunity for others to challenge or present a dissenting view, so it is not as if one opinion holds sway or anything. To me it is more about the strength of the argument than the conviction of the arguer, so the more views the merrier.   

I would imagine most of us would agree it would be unwise to "follow" anyone blindly, like I said DYOR!

[Popeye]

I should add, in terms of OCA I am pretty unbiased as I no longer have a holding.  I follow out of curiosity as I have noticed the RV's are rather tricky to assess due to the many moving parts and a business model (aided and abetted by inconsistent and obfuscatory reporting practices) that make it difficult to parse whether the business is doing well or not.  That is the real reason there is so much debate on these.

With most businesses it is pretty clear whether they are profitable, and the debate is about their future prospects.  The only thing investors seem to agree about with RVs like OCA is whether the operations themselves are being run well, as opposed to whether they are a actually a good investment! 

There are a lot of things that have to go right for RVs to consistently and predictably generate cash, the ultimate measure of a investment.  The question to me is, are enough of the factors within the control of RV management to justify investment?  And at what price? 

To my mind, the thing most in control of RV management (running a good operation) is not the thing that delivers or will deliver superior or predictable returns to investors, which makes me wary of all of them...  Love the debate though.

[Shareguy]

I did not mean to stir up a hornets nest or anything.  All I meant was there are a number of commenters on this MB worth reading carefully, and Basil is definitely one of them. 

Personally, I can cope with someone switching tack on their investment theses, even 180 degrees.  On a forum like this there is the open opportunity for others to challenge or present a dissenting view, so it is not as if one opinion holds sway or anything. To me it is more about the strength of the argument than the conviction of the arguer, so the more views the merrier.   

I would imagine most of us would agree it would be unwise to "follow" anyone blindly, like I said DYOR!

Well said. Changing views on a stock is perfectly acceptable. Often more information becomes available or other opportunities present themselves.

[Basil]

Thank you for your kind words Popeye and for your contributions on here.  Please post more often !

The first CEO Earl Gasparich was a very charming and articulate gentleman and many were drawn in by his charismatic personality and his conviction of wanting to do better for residents.  He presented extremely well one evening at the Auckland branch of the N.Z. shareholders association and clearly articulated OCA's 6 year transformation plan which promised not only much enhanced experiences for residents but also transformative returns to shareholders.  EBITDA per care bed back when OCA listed was just over $19K.  Unfortunately things have not panned out anything like what was promised.

I was fortunate to get most of my stake in the early years at around 70 cents and saw the writing on the wall several years later and sold most of my holding for $1.40 and apart from a couple of very small and very modestly rewarding trades, (which were not worth my time), have remained out since then.

I don't get emotionally attached to stocks, as a numbers man when the numbers no longer make sense I sell and always clearly articulate on here, (or in days past), on the other channel why I believe the stock is no longer the best place to allocate your capital.

Nobody gets every call right.   The tall poppy syndrome is alive and well, that's all I have to say about my detractors.

Over the years the whole care suite model simply hasn't got that much traction and I have warned many times that the unsold care suites are an extremely serious problem.

I believe the quality of management is very poor.  Imagine for a minute being paid approx $1.7m as the top dog plus bonus's and then calling in outside consultants to tell you how to manage a core and very simple part of your business that is selling units.   That is absolutely farcical.

The one consistent over the years has been the CFO who has done an absolute stellar job of highlighting anything positive, (not that there has been much), and obfuscating everything else. 

The fact that they have now sold 18 of the original 25 villages they floated with tells you that private equity floated a dog.  Whether they can turn this around and stem the extraordinary cash burn of existing village operations which has got worse and worse year on year remains to be seen but I note they've had more than 8 years to try and transform this business, far more than the originally articulated 6 year transformation plan and earnings are still lower than the first full year after they floated, substantially lower in inflation adjusted terms.

Over that same timeframe, SUM which is a very well managed business has grown earnings substantially along with its share price.

Finally, I remind observers that senior management's salaries have more than doubled since they listed and investors are getting nothing.  Not once in the annual meeting speeches was earnings per share mentioned.  That speaks for itself and should sound a warning bell for any experienced investor.
Just as well everything is going to change going forward and they will laser focus on improving returns to shareholders, (sarcasm).

[Benji]

I don't get emotionally attached to stocks

Very delusion.

[Poet]

Well said Basil.

I'm still holding but no longer expecting the current management and leadership to improve things. Only hope for long suffering investors is a takeover.

At the recent ASM the chair had this to say

'Suzanne and her team have developed a five-year plan that builds on our strengths and focuses on
what matters most - improving resident outcomes, developing our workforce, and operating sustainably
over the long term.'

IMO this is exactly back to front

The five year plan should be focussed (as for any business) first and foremost on profitability. The secondary and corollary focus should then be to work out what needs to be done to create that profitability -that will obviously include providing good value and great service to residents and staff.

It is unbelievable that a chair would address a SGM and never mention profit.

[Basil]

Thanks Poet.   Yes I noticed their new 5 year transformative plan and agree 100% they have got this all backwards.  For more than 8 years now Liz Coutts has lead the board and selected replacement CEO's on the basis that if you look after residents well, everything else will fall into line.
Its clear she is wrong and their new focus is misplaced.

The very real risk with hoping for a takeover as I see it, is the board, (which I rate as the same level of competence as management) will simply dismiss any approach made as being below fair intrinsic value.  There's a very real chance several approaches have already been made over the years and that's exactly what's happened.  Consider how that's worked out for Steel and Tube's shareholders with the $1.90 attempted takeover by FBU many years ago which was dismissed on that basis.

To hold on the basis of a possible takeover is to hold on believing the board hold a realistic view of the fair value of the business, would disclose any approach made, recall how ARV tried to conceal the original $1.70 takeover offer from shareholders), and will put shareholders interests above their own vested interest.  Keep in mind too that this was passed over while both MET and ARV were acquired.  That speaks for itself.

[LoungeLizard]

My two cents worth is that there is a danger on this site and the other that a few loud, insistent voices drown out other views and opinions, and can, if not careful, stifle debate rather than encourage it. I have seen this happen first hand and it is discouraging when opposing views are not welcomed or considered, and instead invite derision and put-downs. I lament the fact that there is a few people whose views and experiences I valued no longer post because of the flak they got from certain people. 

I have said it time and again - there is numerous ways of investing and we all take the approach that works for us over our own timeframes. An echo chamber doesn't work for anyone.

[Greekwatchdog]

Investor Day 16th Sept. Guess we won't be getting any new information before then.

[ValueNZ]

I wrote to the Oceania Healthcare Board on Friday, I have attached the letter to this post for download. Alternatively you can read it on my substack

[Auto Rower]

If only shareholders value & wealth where their main priority, anyhow good luck with that.
Rock on Tommy

[ValueNZ]

If only shareholders value & wealth where their main priority, anyhow good luck with that.
Rock on Tommy

Remember, the board members are all also shareholders, collectively owning ~5% of the company. Our incentives are aligned.

"Show me the incentive and I'll show you the outcome" - Charlie Munger

[Basil]

Good letter and makes good common sense. From memory under the listing rules the maximum number of shares any company can buy-back within any 12 month period is 5% so that's one obstacle and it would therefore need to be a multi year program.  The biggest problem however is neither the board or management seem to have any concern for, of focus on shareholders at all and frankly they never have.  Frankly they have always appeared to act as though the most important stakeholders are themselves, (doubling and more in pay since listing for key C suite management a good example) and after themselves residents, staff and the environment all seem to be their key priorities.  Shareholders or earnings per share only ever get considered when they're handing around the begging bowl for another capital raise that's allegedly eps accretive.

Good luck getting the board to take a more shareholder centric focus.  You'll need it but I commend you for trying.  Stay on their case.  Hound them at the annual meeting is my advice.  How about this as a question for the next Annual meeting.  What the heck is the point of building new units especially care suites when you have so much unsold stock and could buy back your own shares for 41 cents on the dollar.  I'm almost tempted to buy a few and start the ferocious barking at the next annual meeting myself.  If they can't see the logic in what you're suggesting why are they even on the board purporting to be serving shareholders best interests ?  I'd suggest at the next meeting, you suggest that if they're not prepared to take some action they should resign.  I'd love to do the barking but I'm an old dog now and its time for the next generation to make their mark.  I look forward to you making some noise at the next annual meeting.    My advice, don;t hold back, really rip into them.

[Stockgathering]

I wrote to the Oceania Healthcare Board on Friday, I have attached the letter to this post for download. Alternatively you can read it on my substack

[/quot

Great letter. Sad that the board have not taken this action long ago.