In 2012, the company announced plans to look at advantageous “structures” going forward; this includes possibly being bought up by one of the major REITs or splitting the business. With a $3.2 billion market cap, Brookdale Senior Living, Inc. (NYSE:BKD) could be a reasonable acquisition for any of the major healthcare REITs.
However, Health Care REIT did blow through the majority of its cash on the $845 million purchase of Sunrise Senior Living. The other option is to split the company into two parts, one operating the communities and the other owning the communities.
More recently, performance looks to be picking up. Brookdale Senior Living, Inc. (NYSE:BKD) posted EPS of $0.03 during 1Q, compared to the $0.09 loss in the same quarter last year. This comes on the back of 4.3% revenue growth. Meanwhile, cash from facility operations was $0.57 compared to $0.48 during 1Q 2012. And Brookdale had average occupancy of 88.5% during 1Q, which was up 0.7 percentage points year-over-year.
Hedgies
Going into 2Q, there were a total of 15 hedge funds long Health Care REIT, Inc. (NYSE:HCN), which was a 12% decrease from the previous quarter. Billionaire D.E. Shaw had the largest position among major hedge funds, worth over $85 million (check out Shaw’s upside picks).
Ventas, Inc. (NYSE:VTR) also had 15 hedge funds long the stock, but saw a 36% increase from 1Q. Holding the largest position was AEW Capital, with 5% of its 13F portfolio invested in the stock (see AEW’s top stocks).
Having some of the most robust interest was Brookdale, which had 37 hedge funds long the stock. Fortress Investment Group had the most valuable position, which accounted for 8.4% of its 13F portfolio (check out Fortress’ top stocks).
Bottom line
With the rising number of baby boomers, all of these stocks are solid bets on the aging population. Both Health Care REIT, Inc. (NYSE:HCN) and Ventas, Inc. (NYSE:VTR) pay an impressive dividend yield, and Brookdale Senior Living, Inc. (NYSE:BKD) is expected to see solid EPS growth over the next five years, with expected growth at an annualized 11.5%, according to analysts. But with its superior dividend yield and recent pullback in the stock, I would opt for Health Care REIT as one of the top bets on the aging population.
The article How to Play the Baby Boom originally appeared on Fool.com and is written by Marshall Hargrave.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Health Care REIT. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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