Friday, June 15, 2007

Paperstand (BKD, KMR)

The leading newspapers go gaga on mortgage lenders, REITs and subprime. Last time they did that, it marked bottom of the real estate market. For example: “More trouble in subprime mortgages;” ”Subprime woes pinch Bear’s mortgage star;” ”Subprime shakeout;” ”Tishman Speyer and Lehman lowered their bid for Archtone-Smith;” “Rising rates squeeze consumers and companies;” ”Freddie’s stricter accounting renders a loss;” “Wall St. firms hurt by the subprime lending fallout;” ”Home foreclosures hit fresh high;” ”Dawning: New reality for real estate;” ”Mortgage rates jump the most in over 3 years.”

Barron’s Online highlights Brookdale Senior Living (BKD), saying that strong demand for senior-citizen housing is bolstering the fortunes of the co. But though Brookdale has become the leading manager of senior housing in the US, its stock has not followed suit. But the stock could gain roughly 20% over the next year with the help of additional gains from dividend growth as Brookdale continues to add more units for rent and to trim expenses. The co is quite simply a cash-flow story. It incrementally passes on part of those gains to shareholders through dividend increases. Brookdale is now stepping back from an aggressive acquisition phase in a highly fragmented industry to focus on increasing cash flow by expanding current facilities and adding on ancillary services. Brookdale's initiatives will help push its brand as a destination spanning seniors' needs for those with active lifestyles to those that need nursing care. As Brookdale grows, it is generating economies of scales that are reducing costs and improving operating profit margins. Gary Ran, CEO of Telemus Capital Partners, says Brookdale is a play on "the combination of being in the right industry and having strong, financially disciplined owners."

“Inside Scoop” section reports that Kinder Morgan Mgmt (KMR) shares recently hit an all-time high, but several insiders, including the co's CEO, see opportunity for the stock to kindle yet more value. On June 11 and 12, four execs from the co purchased 54K shares for $2.7m. The recent cluster of purchases is the first instance of insider activity at the co since Oct’05, when Richard Kinder last purchased shares, notes Ben Silverman, of

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