John Levin Explains to New Senior Investment Group Inc (SNR)’s Board Why the Stock Is Slumping

Levin pointed out that the problem doesn’t lie with New Senior Investment Group Inc (NYSE:SNR)’s management, but with the external management structure involving Fortress Investment Group LLC (NYSE:FIG), which has misaligned the interest of New Senior’s shareholder’s with that of its management. The evidence of this can be seen in the double digit drop in stock price of companies that were spun-off from Newcastle following an announcement during Fortress’ second quarter conference call regarding Fortress Permanent Capital Vehicle (PCV), to which all the spun-off companies had an exposure. Fortress stated its intent to raise between $12 billion to $15 billion in capital for PCV by the end of the year, while the capital at that time stood at $6 billion. New Senior Investment Group Inc (NYSE:SNR)’s mistimed equity offerings in the past, relating to transactions involving Fortress, have wrecked havoc, with the June 22 offering as one example. Hence there is an urgent need of separation of the two businesses, if the management ever wants to climb out of the hole that they have dug themselves in.

Among over 700 hedge funds that we track the interest in New Senior Investment Group Inc (NYSE:SNR) has risen during the June trimester as a total of 27 funds had total investments worth $351.16 million in the company as compared to 22 firms with $293.14 million held in shares at the end of March. Veteran investor Leon Cooperman‘s Omega Advisors hiked its stake in New Senior by 94% during the second quarter to head our list of New Senior’s shareholders with some 5.45 million shares valued at $72.86 million, while John Osterweis‘ Osterweis Capital Management owned some 4.09 million shares valued at $54.67 million.

Disclosure: None