If it's good enough for Oaktree - it's good enough for me!
Updated
Ashford, like most hotel operators, took a serious hit due to Covid. They are hanging on and I believe they'll survive thanks to their strong portfolio of properties. I caught this one back in late December and early January and happened to notice that Oaktree Capital was supplying AHT liquidity. After further research, I am long. I think this one is going to skyrocket as normal patterns of business and living resume--and they will!
In the short term, and as I write this, the weak hands are selling out of this because earnings will be reported 2/24/21 after hours. These Covid and wintertime affected earnings will likely suck, I expect that. The real test is gong to come the spring/summer/fall of 2021.
Ashford owns many high-end hotels, with a good amount of those in TX and FL. I keep things very simple: We're witnessing a large population flow to these states, I believe that will inevitably continue. You wanna move to TX-- you're gonna need to go down and scope things out--so you get a hotel for a few days. Business is booming in these locations and there is a tourism draw as well. Sure, some will stay in some musty ma and pa rental, but I guarantee that local businesses will have contract rates with the big guys. When a prospective software engineer flies into Austin, Orlando, Jacksonville, for an interview, they will be staying at the Hilton, Embassy Suites, etc. on the house.
There is some CA exposure I'm concerned with. The one positive: AHT is positioned well to serve tourists as they are located in great places.
Overall I'm very excited about this one. I have a decent but reasonable position going if things don't work out.
In the short term, and as I write this, the weak hands are selling out of this because earnings will be reported 2/24/21 after hours. These Covid and wintertime affected earnings will likely suck, I expect that. The real test is gong to come the spring/summer/fall of 2021.
Ashford owns many high-end hotels, with a good amount of those in TX and FL. I keep things very simple: We're witnessing a large population flow to these states, I believe that will inevitably continue. You wanna move to TX-- you're gonna need to go down and scope things out--so you get a hotel for a few days. Business is booming in these locations and there is a tourism draw as well. Sure, some will stay in some musty ma and pa rental, but I guarantee that local businesses will have contract rates with the big guys. When a prospective software engineer flies into Austin, Orlando, Jacksonville, for an interview, they will be staying at the Hilton, Embassy Suites, etc. on the house.
There is some CA exposure I'm concerned with. The one positive: AHT is positioned well to serve tourists as they are located in great places.
Overall I'm very excited about this one. I have a decent but reasonable position going if things don't work out.
Trade closed: target reached
I liquidated my position today, what a trade!With share dilution, Ashford is trading up around what would have been ~$50
Market Cap is now 11B+, I think now is the time to pull the plug on this one till it cools off again
CEO himself has confirmed that the leisure traveler is back, but that the recovery in business travel this fall is yet to be seen. Personally, I don't believe we're ever going back to pre-covid patterns. Instead, long distance tech will capture that space. The high price of oil is going to make travel much more expensive as it continues its approach of the stratosphere, this will naturally curtail unneeded trips.
Note
Ashford is looking like it may be toast. I did not anticipate the rapid surge in the Delata variant of Covid which is spreading quickly, even in the summer. It seems a pretty strong bet that this winter is going to be a huge problem. Ashford saw a return of the leisure traveler but as I've mentioned previously, the CEO himself stated that the return of the business traveler was yet to be seen. I will be shocked if there is any significant business trips this fall or winter, everything will be over Zoom. On top of all this, Ashford did a reverse split recently. This flushed out many retail traders and the stock has been in the doldrums since. Even if the stock tanks further from here, and I believe it will, I don't believe retail will come back in at lower prices due to trust having been broken.
I believe there is a very real chance that AHT will succumb to bankruptcy as all sources of liquidity will be severed.
I will not be touching this stock again, it was a fun ride but I think the future is bleak here. A friendly reminder: it's always the common shareholders that are left with nothing in the end.
If anyone has a different perspective here, I'd be interested in hearing your insights.
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