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Published Sun, 24 Sep 2017 15:26:51 -0400 on Seeking Alpha
Investment Thesis Sell StoneMor Partners L.P. (STON) - poor cash flow and loan covenants will prevent StoneMor from making dividend payments and drive the stock well below $5/share.
This article is an update of the article published on September 2, "Why StoneMor Will Eliminate Its Dividend Payments - 4 Warning Signs." StoneMor finally filed their 2016 10K on September 15. This article includes analysis of the new information included in the 10K. The 10K shows further deterioration in cash flow, strengthening the bear case outlined in the original article.
Business Overview StoneMor provides funeral and cemetery products and services in the United States as an owner or operator of 317 cemeteries and 105 funeral homes ($216 MM market cap at closing price of 6.24 on 9/22/2017). StoneMor is structured as an MLP and is a “roll-up” that has been built through acquisitions. Revenue is roughly 80% cemeteries (lots, vaults, crypts, mausoleums, markers, opening and closing services and marker installation) and 21% funerals (caskets and funeral services).
Two SEC subpoenas have been issued to StoneMor covering multiple areas, including the source of funds for unitholder distributions and insider trading policies. In the press release announcing the filing of their 10K, StoneMor reveals that they have received two subpoenas from the SEC - see excerpt from the press release below. The subpoenas are especially troubling given the allegations in... Read more
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