Levin Capital owns 5.2% of New Senior Investment Group (NYSE: SNR) and sent its first public letter ever the other week. The letter, to New Senior, notes that since the spinoff from Newcastle Investment Corp in 2014, shares are down nearly 50%.
The company's operating results have been strong, with increasing occupancy and FFO, leading to the conclusion that the stock performance is being driven by a poor corporate structure.
The external management structure is one that can lead to serious conflicts of interest. The structure currently in place between New Senior and Fortress is causing concern.
New Senior’s stock is trading below NAV and Levin calls on Fortress to take meaningful action to demonstrate a more appropriate balance between the external manager and the public shareholders.
The fix is to address the external management structure and further align Fortress’ compensation to stock price performance. Later, there could be a stock buyback and potential liquidation if the gap between the market price and NAV persists.