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.
Trade closed: target reached
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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 1B+, 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.
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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.
I can’t blame you for getting out. It needs a pullback and with the market going into a bear market sooner than later this needs to drop. But to see 40 or 60 I don’t think is unlikely at all. It may take a year or two but I am pretty sure it will get there.
CJS04
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Just discovered this one thanks to Finviz and I to think this will be atleast at 40 in the coming months/ years.... its a tuck away and forget "fun size" position that if it does not work out, it wont break someone but I am pretty confident this will see 40s ahead if not higher...
scottybfx
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@CJS04, I continue to build my position as price has been running lower. Earnings call May 4th, but in all likely hood it'll take a while for a bounce back.
I mentioned on Twitter recently that I've been going through the Ashford portfolio and going through the booking process for many Ashford properties looking at Fri-Mon periods and many properties are at capacity- no rooms available! This thing is quietly recovering.
One limiting factor with AHT is dilution - lot's of shares being dumped into the market and that has held down prices. There is an argument out there that on a market cap basis, AHT is basically unchanged from 2019. With this said, I believe the Covid recovery will be a catalyst for a surge in tourism and travel for the next several years. We have a whole generation of people who are not going to take traveling for granted. I think this will result in a higher market cap for Ashford.
CJS04
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@scottybfx, I agree sooner or later this will recover and good point about the dilution. I also see an article in a texas paper when you google the company about some inner struggles amongst the inside. All in all though I think buy what you can afford to lose (dont bet anything you will be hurt from) and hold onto it. The chart says 40s will be seen. When? Who knows.. six months, two years. Well see. I do think it heads below $2 without question before hand though... and keep in mind how overextended the market is at this point. The market needs a correction and that will help to bring this price down. I am looking for 1.50 or lower to enter... I think it will get there. I like the 103 properties I believe they control. All in good locations and nice hotels from what I saw. Patience is all it will take to get back up there... Good luck! I am sure this will do well in the coming months/ years ahead....
razorray21
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Thanks for the Info! I will be keeping an eye on this one