Disaster Du Jour: WCG
Yesterdays raid on WellCare Health Plans offices in Tampa, FL occurred about 5 minutes before the market opened. This stock traded until 10:59 a.m. before trading was halted, which provided the only respite shareholders will witness for some time:
Federal law enforcement agents executed a search warrant this morning at the offices of WellCare Health Plans Inc. on Henderson Road, and people were seen removing materials from the building of the managed care company.
Acting U.S. Attorney James Klindt said FBI agents and law enforcement agents from the U.S. Department of Health and Human Services as well as the Florida Attorney General's Medicaid Fraud Control Unit were participating in the execution of the warrant at 8735 Henderson Road in Tampa. The ongoing investigation "does not directly concern, nor should it have any impact upon, the delivery of any health care service to any person," the U.S. Attorney's Office said in a statement.....Many employees were standing outside the offices this morning, talking on cell phones or heading to their cars to leave.
Steven Meitzen, 51, arrived at WellCare about 9:40 a.m. for a job interview. A sheriff's deputy stopped him when he exited a parking garage elevator and director him to stand with a crowd of about 20 employees waiting outside, he said.
"I was told by a member of the human resources that they thought it was a bomb scare, but they were locked down and not allowed to leave the building," Meitzen said. "Later on, I talked to someone who said (the FBI) had a subpoena and were looking for records."
Meitzen stood by for nearly half an hour, watching "a lot" of unmarked vehicles with flashing ligths surround the property.
"They had a lot of the entrances covered," Metizen said. Tampa Bay.com
WellCare's stock has been a thing of beauty, and seems to display the kind of price momentum that quants kill for. And several of them might be hurting today when they finally open the stock.
James Simons and Renaissance Technogies will be taking a big time hit on the common stock today, although the might have been able to hedge the position somehow. But with a 3.5 million share position at the end of June, RenTech, other quants and some of the large vanilla shops could be hurting today.
Nobody said life was fair, and health care investors deal with this type of situation frequently. The matter might eventually go away and the stock recover, but today this will leave a mark.
The last trade was $115 and If they open the stock in the low $40’s, shareholders will witness nearly $3 billion evaporating, at least temporarily. A pristine balance sheet might be a silver lining, and if the company is able to buy back stock they might want to get busy at some point.
Life ain’t fair sometimes.
Federal agents descend on WellCare
Tampa Bay.com
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