<<The 20% membership growth you cite is naturally
what is coming in the front door. Once those slipping out the back door cease, then I believe some stability
will arrive.>>
Not naturally. According to the article, the consensus is 20% NET
growth (400,000 added even in the worst case scenario) among the largest benefits consultants. That puts revenues up near $6 billion. That's a lot of money coming in. To be had for $1.7 billion. At $20,
that's only $658/enrollee in a plan growing at $20%.
In any case, the article was not all bad:
exchange2000.com
What's the worst case? How about a $200M fine - they have
insurance against the lawsuits? Now that's like 5 X too extreme, but lets look at it.
In AR and cash they have $1.006 billion, in AP they owe $561 million.
Even a $200M hit is survivable. The article mentions that
Oxford is financially one of the strongest.
I admit that the next announcement is likely not to be a good one,
but that's why the stock is down to $20-$21.
So what's the fear, that NY will shut Oxford down? Who here thinks
that will happen? Can NY do it? No. And for the long term holder,
what is the risk when the patients don't want to leave Oxford
and like it so much. Very very rare for the majority of patients and
even a minority of doctors to love their HMO. I anticipate a
dip in enrollment momentum this year, only to resume next year.
Fact is December is the worst month for stocks that have been hit
hard during the year. Fact is that the fall from $75 is very
recent, and the Street is just turning its back in disgust during
an otherwise bad month.
After all, analysts absolutely loved this stock. Fine line.
The franchise is still the best around for the patients, and
for many doctors too. Aetna
and Cigna had similar problems with IBNR mis-estimates after
their recent acquisitions, but the analysts weren't in love there,
so the hate isn't as severe either.
Dangerous would be if I was at all margined on this stock.
A 2 year (no one is looking out there) double is a 41% annualized
return. I see disgust everywhere - my e-mail can attest to that.
Is anyone else out there bullish? If not, I like my position.
Good Investing,
Mike |
