Bought some SRZ (Sunrise Senior Living) on 9/23/09 @ $3.00 per share… Originally, I was planning on holding onto this over the next few years, but the price has jumped up in the last few days and my emotions have gotten the best of me. Sold today @ $3.60 for a gain of 20% in just 2 weeks… I know, I know, Postquartermaster is going to yell at me for not going all in with options and making a %3,647.8 profit in 5 days instead, but I will just have to deal with it when it happens.
If it drops back down, I’ll consider stepping back in… They are the true nature of a “distressed asset”. They have considered bankruptcy a few times, but seem to be working things out with their lenders. They own about 415 properties and will be selling 21 of them to BKD for $204M ($50M gain for them).
Let’s do the math here, but their market cap is only listed @ 185M. They just sold 5% of their properties and came up with proceeds about a third of their market cap. To me, that seems undervalued, but who knows, these might have been their largest properties. Their balance sheet says that they are worth about 1.3B. About 700M of that is listed as property. They do have a lot of bills due though which worries me.
They just put in a new CEO. If you buy stock in this company, it’s very speculative and you are bascially gambling on if this CEO can dig them out of the hole and turn the company around. If he can make them profitable, then they have room to grow a lot. However, they listed that their growth comes from retirees selling their homes and that the price drop in the housing industry has hurt them badly in this area. I don’t expect housing prices to come back up for anohter 10 years, so there may be a lot of financial headwind left for this company.
I should also add that my grandparents live in one of these places. Generally, the people that live here are VERY dependant and can’t just up and move out into their own villa. We are talking OLD people. Even my grandmother (age 89) called the other r