Nobilis Health Corp (HLTH)

A roller coaster. He use to own it and sold on short reports. The quarter looked pretty strong, but the receivables went from 75 days to 120 which is a red flag. He decided to stay away from this name. He thinks the CEO has stepped down.

They essentially run hospitals in the US, primarily in Texas and Arizona, and generally try to buy them as distressed assets from doctors when partnerships break up. He is cautious about anyone that does a lot of acquisitions. Management couldn’t answer some of his basic questions which he found disturbing.

He got out. He had enough after a few months. There is a lack of faith in management. The report about seeking alpha was nonsense. The company has to grow up in terms of investor relations. The stock will stay low, but it doesn’t mean it can’t recover once this has passed.

Doesn’t cover this very closely, but does recall that they had controversy last year when a short seller came out with a report about the company. When you have an event like that, it generally takes a long time for stock to come back. He wouldn’t want to be in this name.

Has been a rocky road in the last year. Got stopped out of his position in the $4.50-$5 range, and just went back into it lately in the $3 range. Thinks they will continue to grow. Had a lot of bad news and publicity around them including a Short Seller’s report, and then a new auditor missed having quarterly numbers filed on time. Lately have had some good earnings numbers and have continued to improve their guidance. The CEO has been buying stock. Technicals have also started improving.

You have to have referral business from all their acquisitions for it to work. It is not his favourite. He hopes he is wrong.

Has found some kind of level at around $3. The selloff has been off of good volume, which concerns him a little, but on the other hand it is beginning to form a bit of a base on half decent volume. Thinks this will be news driven as most healthcare stocks are. At these levels, you could buy and just sit and wait for the next story.

The positive is that during the sell off the volume has increased. The negative is that we had a up leg in spring 2015 and then it ended. It takes a long time to recover from the damage from a spike. We are probably at the bottom, but it will take a long time to build a base.

Has come down with the healthcare sector. Not one of his favourites in healthcare. Acquisition of clinics, many of them distressed. 1 or 2 in the beginning were not approved by insurance companies, so were not recommended to people. Since then they have bought 1 or 2 that do qualify, which is very important. Had sold his holdings.

(A Top Pick Jan 14/15. Down 4.96%.) If you had a crystal ball, this would be a great little trading stock. He is always watching this.

There were some Short reports on this and the management team had to defend themselves. Has been very good earnings growth. Just announced that they did not have the problems the Short report had commented on, and the stock rallied about 15%-20%. Just announced the CEO was stepping down because of health issues, so the stock dropped about 20%. They will probably come out in the next few weeks with an update in terms of their revenue and earnings for the last quarter. Thinks they should be very good and expects the stock will react very positive to that.

As far as he knows, they still have not released their financials. There was also a Short report that came out. When this got down to $3, he was a Buyer at $2.90 but was a Seller at $4. In Small-cap land, you can buy good companies and wait, and at the same time also buy companies that are being pounded by the market due to extreme circumstances. Management team is now in a rebuilding confidence stage.

(Market Call Minute.) They are supposed to get their financials out and people have been waiting and waiting. It’s a Buy because it is cheap.

If you like the story, technically it looks awfully good. It looks like something that you could Hold here, but at $3.50 it is not something he would want to be part of anymore.

We had a long base and then it ran up and spiked. When you get a spike and then it goes down, you don’t repair the damage. The volume is increasing so this is probably the low. It will take 3 or 4 years to fix it.