By some estimates, Warren Buffet has amassed a personal fortune that exceeds $86 billion.
Apparently, the money piles up quickly when you run a company (Berkshire Hathaway) that can deliver an annual compound gain of 20.3% over 55 years.
One of Buffet’s favorite investment strategies is to fund otherwise sound companies that suddenly are struggling — preferably for reasons that are external and temporary.
By that standard, it would appear that Disney stock is quite a bargain these days. With its amusement parks closed and its money spigot largely turned off (thanks to an ongoing pandemic), Disney is taking a financial pounding. Which means old Warren is probably gobbling up its shares by the truckload right about now.
You know what other sector might also be a hidden bargain? Senior living. And no, I have not been drinking.
To be sure, COVID-19 is shaking the sector to its core these days. Some analysts even are predicting the field might not survive — and that major strategic and tactical adjustments will be needed, regardless.
It’s easy to see why many experts are anything but bullish. For starters, thousands of pandemic-caused deaths in this sector are nothing short of a national tragedy.
Nor is it a secret that many operators are paying through the proverbial hind teeth to acquire personal protective equipment and workers. And for as much as many operators would prefer otherwise, this remains a needs-driven business. By any reasonable standard, this is not a happy or easy time for this field.
So why am I so optimistic? Actually, I just explained why. It’s a needs-driven enterprise. And not just for the well-rehearsed reasons.
We all know residents need the three Cs senior living provides: care, compassion and companionship. But here’s the dirty little secret that just about nobody talks about: Senior living often acts as a relief valve for spouses and children on their last nerve. Both often need more than a temporary break from their increasingly dependent spouses and parents.
I recently spoke with a friend who spends a lot of his time and considerable fortune investing in things. He happens to include senior living holdings in his enviable portfolio. When asked whether he planned to keep things that way, he had a one word reply: absolutely.
His rationale: Even children who dearly love their parents rarely want to live with them. The way he sees it, fearful and / or exasperated next of kin will continue to be major market-drivers. It’s as simple as that.
Will the post-coronavirus normal be different for senior living? In the short term, there’s no doubt. But let’s say a vaccine or, better yet, a cure emerges. The outlook could sweeten as quickly as it soured.
To be sure, investing in the senior living sector involves risk. That perennial advice has never been truer than right now. But it’s the kind of gamble the Oracle of Omaha surely could appreciate.