With the market getting clobbered as it did yesterday, talk is turning to bargains. But not
kind of bargains. The
analyst, who doesn't mind going out on a limb, is very high on nursing homes. During a marketing trip to the West Coast last week, "nobody wanted to hear these names," he says.
So, why talk about them here? Because while the
of the world will be picking through the ruins of the techs and the financials, hoping to catch the next turn, nursing homes remain outta favor and very outta style. And they may stay that way for quite a while. But so were hospitals back in 1992, when
talked about socialized medicine. After languishing, they subsequently outperformed the
"These are classic value plays where you've got almost everyone negative on the industry," says one contarian money manager, who's usually quoted here (anonymously) as taking on accounting frauds. His favorites include
(despite a U.S. probe into its costs) and
Mariner Post-Acute Network
, which was created earlier this week through the merger of
Paragon Health Network
Mariner Health Group
Beverly, he figures, is a no-brainer. It'll either work its way through issues related to the probe, he says, or it'll be bought. Mariner, meanwhile, is zeroing in on a niche to provide care for patients too sick to go home but not sick enough to be in a hospital. "Certain companies are going to do a good job of creating a mini-hospital that will take these patients," Villwock says. "Mariner will be the industry leader."
So, why then are Mariner and the rest being boycotted by investors? "People are concerned about a prospective reimbursement plan that pays a flat rate on a daily basis," Villwock says. "In the past they were reimbursed no matter what they did for the patient. In the past, if you were an efficient provider, you did well. If you weren't, you'd be dead. The beauty of the industry is that three-quarters of all nursing homes in America are run by moms and pops. The most efficient people in the industry are publicly held companies. If the efficient guys do well, and the inefficient guys go away, what does that mean for the efficient guys?"
What's more, Villwock expects the company to earn $1.10 per share next year, up from 55 cents this year. But the real kicker: 24.6% of Mariner is owned by
Leon Black's Apollo Group
, whose cost on the stock is 13 1/2 per share. Yesterday the stock closed at a big discount to that -- 9 7/8. Villwock figures it's the most compelling company in the group.
Red-faced and sorry:
I terribly misquoted Bill Fleckenstein in yesterday's late afternoon
dispatch. He said the point of "exhaustion" for the market occurred July 20, not June 20. And it was
new orders for the third quarter, not backlog, that were expected to fall to $600 million from $1 billion.
, the topic of a questioning item here on
Monday, tumbled 37% yesterday to 10 after short-seller
issued a short-sale recommendation, claiming the company's pollution control equipment for cars and buses "possesses no valuable technology." Much of the stock trades in Germany, whose stock market yesterday was closed.
In a letter to the editor of
yesterday, reader Prem Kumar wrote of yours truly: "I've been skeptical about your writing for a while now ... You seem to make flippant comments about business models, stock prices, without really examining the situation in any depth ... I'd like to make an informed judgment about your journalistic merit. Since you are a business journalist and seem to be on some holy crusade to warn naive investors about unapparent risks in overinflated stock prices, could you maybe tell us about how the stocks that you've covered in depth -- not the one-story stocks, but the series pieces -- have performed since your articles? It would be a great exercise in accountability, to say the least."
, CEO sued for securities fraud by
; bankrupt; stock, zero.
California Micro Devices
, CEO and top execs kicked out and charged by SEC with insider trading and securities fraud; stock was around 10; now 4.
, CEO kicked out by board amid controversy; stock swooned; company eventually acquired.
, CEO fired; a high of 17, now 5 1/4.
Set your alarms:
I'll be back on
tomorrow at 6:40 (yawn) a.m.
No safe haven:
An item in yesterday's late afternoon
column about short-sellers mentioned that most traders might wish they were in the shoes of Mike Long, a watcher of short-sellers, who returned my call from vacation at Wrightsville Beach in North Carolina. "I'm writing from a long position on the other side of the Cape Fear River from Mike Long and Wrightsville beach," emails Bobby Atkinson. "The last couple of days haven't felt too good from here."
Herb Greenberg writes daily for TheStreet.com
. In keeping with the editorial policy of
, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnership. He welcomes your feedback at firstname.lastname@example.org. Greenberg also writes the monthly "Against the Grain" column for