Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q1 2016 call → NOWe need to determine if management conveys that the company is currently charging less than the market would bear, and that it is actively closing that gap. The transcript discusses various topics: sales, investments, DOL rule, long-term care rate increases. The long-term care rate increases are relevant. Management discusses rate increases for long-term care block. They have filed for rate increases, received approvals, and implemented them. They say "we've been using... rate increases" and "we are quite up to date on that." They also mention "shock lapses" and reserve releases. This suggests they are raising rates on existing policies. But is this a gap between price and value? The rate increases are likely due to inadequate pricing originally, not necessarily that they are now charging below market value. The context is that they are seeking rate increases to cover costs, not because they discovered they were undercharging relative to value. The transcript says: "we have been expecting to fully utilize our life net operating loss carryforwards" etc. The rate increases are part of managing long-term care business. They are not explicitly saying "we are undercharging relative to value" but rather they are raising rates due to experience. The question asks: does management convey that the company is currently charging LESS for what it sells than the market would presently bear? The long-term care rate increases are about repricing existing policies to reflect higher costs, not necessarily that they are below market. Also, they mention "we are not in a position to definitively state if and how this will impact our business model" regarding DOL. No clear statement about pricing gap. The only pricing action is long-term care rate increases, but that is cost recovery, not a discovered gap between price and value. The question says NO if the higher pricing described is chiefly passing through the company's own cost increases. That seems to be the case here. So answer NO. But let's double-check: Is there any other mention? They talk about sales growth, but not about pricing. They talk about investment yields, but that's not pricing of products. So no. Thus answer NO.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.