Is California trying to kill MPW stock? Is a short-seller attack causing the plunge in Medical Properties Trust? I'll detail why MPW is falling and how to invest. ⏩ Make an Investing Plan Right for YOU in 5-Minutes [ Ссылка ]

Shares of MPW plunged as much as 15% Friday before recovering some lost ground but are still down 40% so far this year and a whopping 70% from the December 2021 peak. Investors sold on news reported by The Wall Street Journal that the California Department of Managed Health Care has put a hold on the company’s deal with one of its largest tenants, Prospect Medical, to receive equity in Prospect’s managed-care business instead of cash payment for $573 million in loans and unpaid rent.

A termination of the deal would put Prospect’s future further in doubt and could mean MPW would have to further mark down its assumptions for rent and debt collection from the company.

There’s more here though than is being reported. Nearly a third (29%) of the company’s shares are borrowed and sold by short-sellers, betting on a further drop in the price. MPW responded late Friday that the WSJ article was planned to strike fear in the market and push a drop in the shares and that the regulatory hold is nothing new and fully expected. Looking back on the article, the depth of negative data and information goes beyond normal reporting and smacks of help from a short-seller analyst.

That’s not to say there are not major problems with MPW. Whether the article was a well-placed attack to make some short-sellers rich or not shouldn’t hide those and investors need to look at the whole picture. I want to detail those problems, why MPW rallied 45% early this year and why it’s falling now. Full disclosure, I own 4,250 shares of MPW at a cost basis of $8.90 per share. I believe the dividend is very likely to be cut to preserve cash flow but should still produce a good yield and a great total return on long-term price appreciation.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.

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