QHC trade for 5/6 – 5/10/2016

Posted By on May 17, 2016 | 0 comments


Community Health hospitals spun off their Quorumealth division ($QHC stock) last week. Many times spin-offs give a great chance for investors to buy the spun off asset on the cheap. This is because when a company gets spun off, lots of investors may not want the newly spun off company and usually what happens is they just dump it right away. This causes the spun off stock to tank in a short amount of time. And with big institutional holders, the amount of shares they have to sell can depress stock prices dramatically.

We decided to pick up some shares of $QHC after it opened at $13.50 and tanked below $9 in a matter of days post-spinoff. That's over a -33% haircut on the stock for no reason! We rode the position a few days and sold into strength before earnings day (they report May 11th Wednesday after the close) to reduce risk. This was an easy stress free swing trade.

All live trades are alerted in the MookTrader stock chatroom and P&L verified once the trade is closed.

Net Profit: +$8,710

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