# Extendicare (EXE.UN.TO)



## londoncalling (Sep 17, 2011)

Can anyone offer an opinion on this one? I bought this stock a long time ago in my RRSP(when I was first learning about stocks and investing) and am currently underwater on it. It was meant to be a long long term hold. When the Obama office made cuts to medicare funding(last august) this stock took a nasty beating and I was certain the dividend would be cut. Almost 9 months later it has yet to be cut is now trading in a range of $7.xx - $8.xx yielding over 10%. REITs ended a period of seasonality strength in January in which EXE did get a slight push from. I have also noticed that this stock often gets a push in the summer when health care has some seasonal strength. I was wondering if this would be a good candidate to average down with. I am cautious(fear), yet enticed (greed) by it's current yield. Does anyone else own it? Do some more experienced investors, have some insight they can share on how to take a better guess at wether a dividend may/may not be cut under a similar circumstance or other bad news? Also, what is a fair timeline for these events to shake out? I know that this would be on a case by case basis. I have been going over the company's quarterlies again and didn't find anything that should cause the price to drop dramatically further. I am sure this stock may also be affected by the presidential election. I was considering buying some more in the near term(end of apr/early may or perhaps even on into June depending on what is happening) and then depending on the election results keep the stock or cut it loose minimizing my losses. I have yet to completely think this one through yet so this post may seem a bit disjointed at times. As a result I won't be jumping in anytime soon. 

Cheers!


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## PMREdmonton (Apr 6, 2009)

The big thing that jumps out at me is they are hugely levered with D/E ratio of 19 and AFFO is 12x which is reasonable but payout ratio is high at 95%. Their P/B is also very high due to that debt load and they recently even had a negative book value. They have also diluted a couple of times in past few years by about 10%.

They also carry a great deal of US regulatory risk. In the recent past funds from the US government were cut by 10% and they had to cut back on expenses and did a good job of turning it around but I think that highlights the risks here.

I looked up the experts on Stockchase and most seem to be very skeptical about this one with most rating it as a don't buy. Charles Dillingham who specializes in this field last said the yield is probably sustainable.

I'd suggest caution in doubling down on this one and would suggest you sell if you get a bump in the summer. Multiple levels of US government are struggling financially and this company is at too much risk of collapsing because of their tenuous financial situation with D/E of 19. Would they collapse with an increase in interest rates?


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## Mall Guy (Sep 14, 2011)

londoncalling said:


> I bought this stock a long time ago in my RRSP


Does this mean that you also have Assisted Living (ALC-N), from the 2006 spin-off? And would the spin-off (to shareholders I believe) of that portion of the business change the fundamentals of the remaining business, in a way that means its doesn't get back to its previous value? Just asking as I have not owned a position in anything that has been spun-out or taken over. Very tempting chart for averaging down. I'm currently underwater with INN.UN, and just couldn't pull the trigger at $3.50 back last fall (and they did cut the divi). Good luck.


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## Eder (Feb 16, 2011)

Buy low, not when the analysts start putting a buy on it... (Unless the reason you originally bought the stock has changed...then cut the cord)


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## londoncalling (Sep 17, 2011)

PMREdmonton said:


> The big thing that jumps out at me is they are hugely levered with D/E ratio of 19 and AFFO is 12x which is reasonable but payout ratio is high at 95%. Their P/B is also very high due to that debt load and they recently even had a negative book value. They have also diluted a couple of times in past few years by about 10%.
> 
> They also carry a great deal of US regulatory risk. In the recent past funds from the US government were cut by 10% and they had to cut back on expenses and did a good job of turning it around but I think that highlights the risks here.
> 
> ...



You nicely summed up my reasons to think that the divvy will get cut yet I would have guessed a cut would have happened by now. Perhaps Mr Dillingham is correct. I assume a dividend cut would mean at least another 10% drop. They may be avoiding the cut at all costs. I have been watching AFFO and payout. I was aware of the impact of the funding cut on AFFO the payout ratio. I also knew there debt level was higher than some. I would definitely not double down but maybe average down another 1/4 to half position to potential hedge my losses. I will definitely have to keep a close eye on this one to see if they do take on more debt or the payout ratio continues to go up. I am also aware of some debentures that are coming due in June 2013 which will either add to the dilution, affect their cash flow, or be refinanced. Depending on how this goes it will be interesting. I am sure there are likely better places to allocate some funds (I do like the thread you started on Poseidon it has me watching closely but I am pretty heavy on oil and oil relateds at the time being). so currently this is maybe only a mental exercise for the time being.


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## londoncalling (Sep 17, 2011)

Mall Guy said:


> Does this mean that you also have Assisted Living (ALC-N), from the 2006 spin-off? And would the spin-off (to shareholders I believe) of that portion of the business change the fundamentals of the remaining business, in a way that means its doesn't get back to its previous value? Just asking as I have not owned a position in anything that has been spun-out or taken over. Very tempting chart for averaging down. I'm currently underwater with INN.UN, and just couldn't pull the trigger at $3.50 back last fall (and they did cut the divi). Good luck.




No I do not own ALC... I guess the term long time is relative. I only began investing in equities about a year ago. I am just trying to see how to make some improvements that I made my first year. I also own INN.UN. I am about even on this one. This stock I understand alot better when I bought it than I did when I bought EXE. It was definitely a learning experience for me. I do understand the stock much better now though and think that this stock should be able to recover alongside a US recovery. I feel it may be awhile before interest rates go up enough to have an impact.


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## londoncalling (Sep 17, 2011)

Eder said:


> Buy low, not when the analysts start putting a buy on it... (Unless the reason you originally bought the stock has changed...then cut the cord)


I do believe in buy low... I just need to determine if it has had a long enough cooling off period...

I never listen to analysts in regards to buy, sell or hold. I do use analyst research for information about stocks but their ratings of buy sell and hold mean nothing to me. I do feel the do have access to more information than I would and like them to share that information be it pointing out important ratios, translating news events etc. It has helped me a bit for reading fundamentals of stocks and understanding seasonality and TA. I originally bought this stock for the yield so I guess that hasn't changed... Thanks to all that have posted thus far... Does anyone view some problems with my thoughts on the seasonal movements of this stock? Some are expecting sell in May to ring true this year because of the market action since the end of last year. 

Cheers!

Cheers


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## newfoundlander61 (Feb 6, 2011)

Not sure if this is the same extendicare or not.

https://www.cbc.ca/news/canada/edmonton/nursing-home-rations-senior-diapers-1.5470130


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## Beaver101 (Nov 14, 2011)

^ I wonder how the executives of this company can sleep at night ... do they not have mothers and father? Or grow old themselves? Absolutely DISGUSTING!!!!


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## Eclectic12 (Oct 20, 2010)

newfoundlander61 said:


> Not sure if this is the same extendicare or not ...


Probably ... though IIRC, the LP and Trust versions were converted back to regular structure that pays eligible dividends instead of mixed income.


Cheers


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## Ponderling (Mar 1, 2013)

I was in this for a long while, bailed fortunately in Dec 2019, and today am back holding them again. 

Also have SIA which I have been with all the way through Covid. It is down, but still spits the divvy, so I am grinning though clenched teeth and bearing it.


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