RE:RE:RE:EBITDAbandit69 wrote: I guess my point to most everything I say is that companies that use debt/leverage, financings etc to sustain themselves, only last as long as the availability of capital does. Once the capital window closes, reality hits very fast. That is what happened with the energy sector. Has nothing to do with the sector but has everything to do with how they all operated. Off of debt, financings etc. Even in boom times they didn't generate profits and still leveraged their brains out. It didn't work and never does. And once rates increase then pain is enhanced for highly leveraged companies since debt servicing costs rise with them.
I tend to invest in sectors that are not capex intensive unless regulated, as the long term sustaining costs are hard to figure out and the changes in commodity prices can hit you hard.
My own specific expertise lies in finance in the energy regulated sector, although I also do work on financial viability of various projects (from $5M to upwards of $100M, from the development of a project to M&A).
I think leverage and financings can be useful tools to generate value but there are limits and when you're unregulated and rely on commodity prices, it can leave you deeply exposed. As a general rule, regulated utilities will work with a 45-55% debt leverage (which do benefit the customers as they get better rates) which is reasonable considering their guaranteed future cashflows and that the end user supports pretty much all risks related to debt.
In the specific case of WELL, I don't think their debt is at level where it presents a danger for the shareholder. Also, if they do acquisitions where the net long term cashflows exceed greatly the capex and debt repayment, I think it will be positive for the shareholders. However, I would prefer if they would use a combo of equity and debt to keep those financing costs marginal compared to the cashflows they generate. So, I think they're a bit handcuffed until the share price goes up and reflects the value of the company better.