January 15, 2020, Steve Monroe, SeniorCare Investor - Shares of Five Star Senior Living have soared by more than 60% this year, leaving everyone guessing. Right after all the restructuring was completed at year-end between Five Star Senior Living and its landlord, now recently re-named Diversified Healthcare Trust, Five Star’s shares have taken off.
Two points to remember, though. Five Star just doled out about 26.5 million shares to Diversified and its shareholders to remove working capital liabilities. And, last October 1 they completed a 1-10 reverse stock split. That is important because now that the shares are trading at over $6.00 per share, for comparison purposes, that would be 60 cents per share four months ago. It just shows how bad it got.
The price moves began in earnest on January 8 with a 26% jump, followed by a 24% increase the next day, all on unusually heavy volume. All told, the shares have increased by 67% since the end of 2019, but no one quite knows why. The problem is that most people don’t care. If the buyers are insiders consolidating their ownership even more, well, that’s one thing. If it is an outside group, which is doubtful, there are a few people they should talk to about the likelihood of success.
This is not the first time we have seen spurts of activity with these shares, and it may not be the last. It is always weird, though, and it has always resulted in little more than commotion. Perhaps it just gives us something to talk about.