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  • dutchboyinvestor dutchboyinvestor Nov 21, 2008 6:49 PM Flag

    New to this stock.. what gives?

    parabolic sell-off week is on top of parabolic sell-off last 3 months. HMA is trading with the likes of C and GM yet has problems of little comparision. Down 86% in last three months.

    No company specific news no real change other than a new CEO - HOWEVER they have debt HMA around 3B and THC 4B.

    My guess is that the primary reason for the latest sell-off is that if they violate their covenant agreements then the bond holders could demand payment force a liquidation- highly unlikely because no bond holder in the right mind wants to go through a fire sale right now.

    Hence the sell-off as a going concern.

    Key facts for me:

    -Operating within EBITDA requirements 14.8% margin
    -Profitable each quarter, every year
    - More than sufficient liquidity to serve debt and excess cash used to deleverage
    -Generated 370M in operating cash this year
    -Good mix of facilities and in a geographic region likely to suffer less in a significant employment contraction
    - Excellent space from legislative perspective because # of uninsured likely to go down not up with dems in charge
    -Debt not due until 2014.

    my plan buy it, hold it, forget you own it, then in 2012 take a look at it to see how its doing.

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    • Smart ass.

      Just kidding.

      You see things as I do. On top of it's positive cash flow HMA will pay down significant debt in 08. 2012 is a bit longer than I'd like to see a turn around. The new CEO is still a wild card seems like he has a good resume but you never know. I'd say by 3Q of 09 we should see if this was a smart buy or not.

      Thank you for your thoughts.

 
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