Post by
1zmxncbv on Jan 12, 2023 9:56am
SELL-HOLD-BUY ??
This conference call was about a company that lost its magic touch and where its business model (aggressive growth by acquisition) blew in its face. I believe management benefited from a low rate environment that masked certain operational inefficiencies. I am still quite shocked they did not have a more robust and active interest rate hedging program in place to fix a lot of their debt and better ward off the risk of higher rates. In my opinion they chose to not hedge to get lower variable rates, and have been caught up in this bad decision. I have not dug down deeply into the notes to the financial statements to see details of past hedging, but this aspect I find shocking. My gut tells me things must be more dire than they let on if the benefits of suspending the DRIP (reducing share dilution headwinds plus corresponding dividend payments) outweigh the increase in present value of free cash flow available from not paying those dividends.