Oh boy, here we go again. Bill and Bob Thomas have sent another letter to shareholders of Five Star Quality Care, of which they own about 3.4 million shares, or 6.8% of the company. As shareholders, they are glad that management realized that they had some valuable assets, the full value of which is not reflected in the share value. It rarely is. But, as we pointed out a few months ago when Five Star sold a few assets for a big price, and a big gain, with seven properties worth more than the market cap of the entire company, they are also subjecting themselves to a big lease payment liability, which will cut into cash flow. As shareholders, this is not making the Thomas brothers happy. True, Five Star could sell the remaining properties they own and collect a few hundred million in cash, which could be distributed to shareholders or reinvested. But what we all have to remember is, whether they are doing a good job or not, Five Star is an operating company that has to be focused on growth. To sell off valuable assets because their value is not reflected in the share price always sounds good, but what will the remaining company look like? If little value is given to owned assets, how will the market value what’s left, which would be a collection of leases and management contracts? I think you know the answer to that.
Five Star and Senior Star… Again
