The S&P 500’s (SPY) almost daily close to new highs is hiding the stocks that sold off. Medical Properties (MPW), a REIT, and Carnival (CCL), a cruise ship stock, are two examples. Why did they sell off last week?
Last Thursday, January 25, a report speculated that Steward Health Care System, Medical Properties’ largest tenant, hired restructuring advisors. Income investors should treat the dividend yield of 26.91% as unsustainable. Steward is a significant uncertainty for MPW stock. Once it restructures, the stock should reset at a lower yield and may stop falling.
On Friday, Jan. 26, 2024, Carnival filed a mixed shelf offering. It needs to manage its high debt load incurred during the pandemic, which shut down its business. The company reported $28.48 billion in debt in its quarter ended Nov. 2023.
Shares of Spirit Airlines (SAVE) collapsed from the $15 holding pattern to $7.10. A judge denied JetBlue’s (JBLU) deal to acquire Spirit. After markets speculated that Spirit would file for bankruptcy, the stock rose slightly. It filed an appeal to the U.S. Court of Appeals. Expect Spirit to restructure its finances in the meantime.
In the tech sector, Canadian firm BlackBerry lost 15.6% in the last week. The firm announced a convertible senior notes offering of $160 million. The debt will pay 3.0% and is due in 2029. The conversion premium is 32.5% above the Jan. 24, 2024 price of $2.93.
