With senior care stocks plunging in recent weeks, it appears we may have finally bottomed out with a significant rally on January 14.
I am sure many of you were watching in despair as senior care stocks have been plummeting since the beginning of the year. It was not rational, it had little to do with core value, it had little to do with current operating performance, and it really did feed on itself. And, seniors housing and care stocks get thrown in the “health care” bucket at mutual funds and other institutional investors, so if they decide to lower their holdings in health care, for whatever reason, the senior care baby gets thrown out with the healthcare bathwater. But hundreds of millions of market cap were lost in our sector since the beginning of the year, if not more than a billion. We were all waiting for a bottom, a moment when investors on the sidelines, or those who had sold on the way down but just had to get back in because prices became too cheap, finally see what looks like a bargain market. That happened yesterday morning, after Brookdale hit a low of $13.95 per share and then jumped by 13% by the end of the day. Kindred jumped by 21% from the week’s ridiculous low, Capital Senior Living rebounded by 12%, perhaps influenced by its announced stock repurchase program yesterday, and Genesis Healthcare by 11% from its low. How long will this last? Well, it will depend on when the bears start growling again. But from a true value perspective, yesterday sure smelled like a bottom. Let’s hope so.