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Jim DoakExtendicare IncEXE.TOWEAK BUYFeb 05, 2003

Bad corporate governance.

Jim Doak

Unknown

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$4.10

Stock price when the opinion was issued

$33.82

As of Jun 16, 2026. Market Open.

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WATCH

He's looking at the space, which is attractive. Off the highs. Business is materially tougher, but we need it. Regulatory issues and scrutiny on EXE. Labour situation also difficult. Likes the price, but wants to see more on the business fundamentals.

DON'T BUY

There's always something that stops him from entering the seniors space in REITs: labour, regulator issues, though again demographics are a positive. That isn't a good enough, though. How will governments with huge debts supplement the entire seniors home space? However, EXE is cheap. This space is too volatile.

DON'T BUY

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.

COMMENT

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.

WATCH

He likes the aging demographics. It has been clawing itself back after problems in the US and high level debt. They are focused on their home care and supply chain businesses. They are trying to now go capital light. He is starting to look at it. It is trading at a discount, relative to peers.

BUY

The long-term care homes are all similar. Slow growers, good dividend yielders. Payouts are reasonable. Steady stream of income. Hasn't increased dividend for 3 years. Resistant to recessions. Labour and other costs are going up. Yield around 5%.

HOLD

A great demographic pick. He bought in at $7.01 in 2014 and bought in again at $6.62. He liked how they paid down debt and reduced operations in the US. He likes the dividend and thinks there is still good upside -- maybe another 50%. They have been growing organically and by takeover. He would like to see them pay down more debt. Yield 5%

BUY ON WEAKNESS

Enjoys a regulated revenue stream like other retirement homes, so it's fairly safe--but has only 2-5% growth. A long-term hold. Buy at $8, though you can sell it at $10.

DON'T BUY

Long term care. They have about 5% dividend but it is over 100% of cash flow. Sales are growing at 1.2%. The free cash flow yield is not there.

DON'T BUY

Would avoid right now, with government regulation risk, and bad press. There's enough risk for negative press in healthcare stock.

BUY ON WEAKNESS

Look at defensive stocks this time of year. EXE's moving averages are moving up. Add more at $8.60. It's overbought now, so expect consolidation first.

HOLD

He bought more in December. They do have some debt -- a little higher than he likes. The payout ratio is such that the dividend is stable, but won't grow. The demographics are in their favour within senior housing. He is happy to keep holding it. Yield 5.7%

BUY

The activist investor? The activist investor owns 9%. It's a leader in Canada. A great demographic play. Good dividend. This could hit $12-14. He's pleased that EXE has come to an agreement with the activist.

DON'T BUY

This sector is almost as bad as airplanes, because there are government regulations and labour issues (minimum wage) and it's labour-intensive. Also. EXE missed their numbers and hasn't done much in two years. They blew their brains out in the U.S. where they got it. Also--his theory--technological advances and government incentives encourage seniors to stay in home and not enter nursing homes. The whole sector falls shorts.

BUY

He bought it years ago. Pays 4-cents each month in dividends. He's doubled-down and averaged down. It doesn't have the normal upside for him, but it's a fine demographic play. People are getting older. He sees 50-100% upside. Safe to buy more here, but he wants them to pay down its debt more.

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Summer Sale

Jim DoakExtendicare IncEXE.TOWEAK BUYFeb 05, 2003

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