Editor's Note: REITs analyst Rob Simone added Medical Properties Trust (MPW) as a BEST IDEA SHORT on April 12, 2022. Shares of MPW have fallen more than 50% since then.

FLASHBACK | "RED FLAGS EVERYWHERE" AT $MPW - Medical Properties Trust dumpster fire cartoonFIX

Of all the 40+ Hedgeye analysts covering their various sectors, none have been more adamant in a short call than Rob Simone with Medical Properties Trust.

MPW first came on the REITs analyst's radar in March 2022. He started asking questions of the prominent healthcare facility investor to understand the motives behind their shady business practices. In a recurring theme over the 18 months that followed, MPW either couldn't or wouldn't answer.

From the time Simone added MPW as a Best Idea Short on April 12, 2022 ($20.23) to August 9, 2023 ($8.80) the stock price has fallen 57%.


As Simone explained in his April 2022 short MPW Black Book presentation:

MPW is one of the largest owners of hospitals in the world, and was originally formed in 2003 to acquire and build a portfolio of net-leased hospital facilities. This idea came on our radar in mid-March following two critical WSJ articles earlier in the year and subsequent client calls. 

We dug into the company, and came to several conclusions:

  1. the economics of the hospital business are VERY tough with thin pre-rent operating margins pre-COVID, which are only getting worse post-COVID amidst rapidly rising labor costs
  2. MPW is AT BEST steeply over-valued relative to the disappointing economics of its deals
  3. the earnings quality and cash flow conversion of MPW are demonstrably deteriorating at an accelerating rate, potentially putting the dividend at risk
  4. MPW's relationship and support (via transactions, loans and a direct equity stake) of a key hospital operating partner in Steward is suspect at best and warrants serious scrutiny
  5. the company's compensation scheme is egregious and management has been selling stock at an accelerating rate
  6. under a "downside" or "ultimate" Bear Case scenario the entity treated as the owner of the hospital system may have no equity value. We believe MPW deserves a significantly higher cost of capital in the market, and are confident that Steward is likely not covering its rent on a pro forma basis. 

A couple of weeks later, given the chance to dig deeper into MPW, Simone pulled no punches discussing the company on The Call @ Hedgeye on April 29. That week, MPW began to attack what it called, “third-party reports” coming from “unequal market commentators,” rather than presenting credible and relevant data.

“The company elected to choose violence yesterday and probably spent about 30% of the conference call; rather than credibly presenting data, facts, and information to support their case, went down the road of non-credible 3rd party reports. What’s ultimately going to matter in the end is the data, the math, and the facts. So what I’m going to do is just continue to pound on that,” Simone explains.

Just red flags everywhere. If you have the facts on your side, you’re credible, and a more than equal or above average management team, you don’t have to resort to making statements like that. Listen to the call, it was nothing short of an absolute embarrassment for that management team. ”

Keith McCullough added MPW to Investing Ideas as one of his highest-conviction shorts on May 26, 2022.


Simone followed up his April 2022 Black Book with a July 28th Flash Call on MPW. (Watch the entire presentation here.) In the invitation to that Flash Call, Simone wrote the following to institutional investors:

Ahead of the company's 2Q22 earnings report on 8.3 we will be reviewing a set of potential scenarios for how this story will resolve itself, all of which are terrible. We will also recap a set of recent egregious accounting gimmicks, and present a list of key questions that we would ask management if allowed. We are optimists, but it is almost impossible to find any positives for this name ahead of what is sure to be a rosy picture painted by management next week (see CYH 2Q22 results for a read across).

In our view, if Steward Health, Prospect and other major tenants cannot stand independently without the balance sheet support of MPW, the arrangement is circular and MPW's equity is fundamentally worthless.


Almost exactly a year after Simone shorted MPW, he was featured in a CBS News investigation into the role private equity plays in the collapse of American hospitals.

From the CBS News article:

In December, CBS News reported on a series of financial moves executed by Prospect Medical management and its private equity backers that legally siphoned money away from hospital operations before the closure. The first move was in 2018 when Prospect Medical's owners took out a $1.12 billion loan and paid themselves a $457 million dividend. 

After paying themselves the $457 million dividend, Prospect Medical's owners then sold off the land and the buildings of the Pennsylvania health system to a Birmingham, Alabama-based firm called Medical Properties Trust. 

"Put simply, they bought the real estate out of Prospect and leased it back to Prospect," Simone explained when the CBS News team visited Hedgeye for an interview this spring.

“I think [the MPW story] is gaining traction in places we didn’t expect,” Simone said at the time. “We’re not looking for attention, but we’re happy to answer questions honestly as they come, so that was the purpose here.”


National exposure did nothing to change MPW's practices. In fact, in the months since, things have deteriorated more drastically than ever.

To nobody's surprise (especially not Simone's), MPW's 2Q23 earnings report on August 7 was an "absolute mess as always."

Simone commented on the latest from MPW each of the past two days on The Call.

From August 8:

We would ask people “is this where you want to be?” This is getting extremely serious very fast, as MPW is now taking a piece of their largest tenant’s credit facility.

And August 9:

MPW may be forced to disclose Steward’s financial statements. The company said they will file them “when they are available." They don’t have their financial statements done yet. This company is a complete joke.