The SeniorCare Investor: Record Month For Sector May Indicate Bottom Has Passed

May 9, 2009

What a difference one month can make, and perhaps Chicken Little has gone back into the coop to take a breather, at least for now. At the end of March, all six of the seniors housing stocks were down for the year, and most were down by double digits. Even though investors were told that occupancy and rates were holding up okay, and that most of the companies had dealt with their immediately looming debt problems, other than Sunrise Senior Living (NYSE: SRZ), through the first quarter, no one wanted to believe them.

Last month, we tried to make the case that the current level of occupancy, rate increases and profitability did not warrant the low share prices we have seen until very recently.

While we would like to believe that our story swayed the pessimists and they subsequently all jumped in on a buying spree, the reality was that the S&P 500 was up 9.4% in April, which was the best April performance it has had since 1938. The Dow Jones World Index was up 12%, which was its largest monthly increase since its inception in 1991. Still, seniors housing significantly outperformed all of the rest of the markets, both domestic and international, and by a wide margin.
 

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