Extendicare Inc (EXE.TO)

Amazing chart. In prime position to take advantage of the demographic story. More of an asset-light play in real estate. Ontario government's increasing funding to home healthcare providers, and it's the largest player. Managing margins well.

High growth, still has legs to mid-high $30s.

This space is now all the rage. A tough business. We are underbuilt, and the demographic wave is coming through. But all that's already in the share price. Be careful, especially with stocks that go parabolic on the chart. There are some very-well-financed private equity players that are hiding supply.

He owns SIS instead.

Doesn't follow it closely. Does, however, follow CSH.UN.

Very reasonably valued at 13x when you look at price to FFO. Similar market to CSH.UN, but EXE is a corporation and that makes it unique. (REITs have to pay out more, or there's a punitive tax.) Pays out roughly half of its FFO. Likes the business model. Bouncing back from pandemic. Doesn't own due to growth outlook.

Both LTC and home healthcare. Long waitlist for LTC beds, so no risk on earnings side. Very good at managing margins. 

Home healthcare is what's growing -- asset light, so dividend won't be as enticing as with other names. Demographics are on its side, but it's hard for him to assign a NAV to it. He'd focus more on names like CSH.UN and SIA.

Focused on LTC in Ontario, also a home healthcare business just in Ontario (which forms 50% of the business). No longer in retirement homes. If you own it, you've done well; continue to hold and collect the yield now south of 4%. If you have strong view of the home healthcare business, you could dip in at a better entry point.

This has been an extremely good performance year for long-term-care REITs. Not sure there's much more in terms of capital gains from where we are now. Unless substantial pullback, wouldn't buy now.

EXE operates long-term care facilities which require a lot of capital, while CSH is more senior homes. CSH has been divesting lower-return investments to become more of a pure-play. You can charge whatever rent in a market if there's no competition. The seniors' population keeps growing. CSH is paying down debt, which was high a few years ago. In CSH, the easy money has been made, though. It could be a keeper, or take profits.

How COVID will effect this industry, retirement homes? He owns Sienna instead. EXE is much more involved in government-funded LTCs. Along with Chartwell, these two companies are under government scrutiny, so they likely do a much better job than private LTCs. Good question how COVID will affect these homes: there may be increased costs to manage the LTCs, and he expects the government to do more oversight, particularly the incompetent LTCs. He prefers Sienna to EXE, because Sienna is a mix of LTCs and retirement homes, while Chartwell is mostly retirement homes, which has more upside but more competitive. Don't buy purely LTCs, like EXE.

Extendicare has a better chart than Chartwell. It has a head-and-shoulder chart movement. If you take into account the general market sell-off, investors need to be forgiving.