NexGen Investor’s Matthew McCall says in this piece ( https://order.investorplace.com/?sid=A0K447&en=5272605 ) that a publicly-traded company is offering health insurance at prices as low as $36 per month, which he says is 9X less than Obamacare insurance. Not sure about that last assertion…if ”affordable” insurance was only $360 a month, a lot of people would buy it. But there’s more. Supposedly, this mystery company’s stock price has tripled, from below $7.50 per share in 4Q2016 to 25.70 in 3Q2017. And, supposedly, it’s about to undergo another triple-digit price rally, according to some analytical work McCall does with charts of support, resistance, and volume. This mystery company makes a bundle of money, says McCall, where conventional health insurers only generate losses, because ”Unlike the stodgy, old-guard insurance companies… they are the leading developer – perhaps the only developer – of cloud-based insurance plans and products”.
A Google search reveals two companies selling cloud services specifically toward the health insurance industry, because they buy targeted Google Ads touting their services. They are Dell and Amazon.
Neither is an insurance carrier, to my knowledge. So there has to be something wrong with that last statement…there would not be two cloud-based hosts of insurance administration products, if no insurers wanted to work in the cloud.
Reading on through the tease, McCall makes one more claim. This company’s sales rose 76.2% in the past year. I took a wild gamble and did a Google search on ”insurance carrier sales up 76.2 percent” and hit pay dirt. On the very first page of Google search results was a link to a press release, ”Health Insurance Innovations, Inc. Reports Record Fourth Quarter and Fiscal 2016 Financial and Operating Results”. ( http://investor.hiiquote.com/releasedetail.cfm?releaseid=1015260 ). They trade on the NASDAQ, says the press release, under the symbol HIIQ. So I brought up a daily chart, and it looks very much like the charts that Matthew McCall teases.
So is it worth $99, a stiff discount off the $815 regular price, to subscribe to Mr McCall’s NexGen Investor? This stock was a nice find, but not sure how effective he is at finding others like it.
For that matter, how about the stock itself?
Well, it was recently a penny stock. It makes big moves in response to earnings reports. The stock began trading on NASDAQ in February 2013, opening at $14.12 and sank to $13.70 that week, sank the rest of the month to $12,00, rallied the next month to a high of $15.86, then made it’s first quarterly earnings report, surprising to the upside by 466.67%. Despite this outperformance, the stock price sank like a clamshell in melted butter, putting in a low of $8.39 that held for several quarters. It bounced between these extremes, staying above $8.39 and even getting back above $14.12 exactly once in July 2014, then sold off gradually to a new low of $5.30 in December 2014. It remained solidly in penny-stock territory throughout 2015, putting in an all-time low in June 2016 of $3.73. Then the stock had it’s sunrise-after-the-demise experience, revisiting $4.00 on October 28th, 2016 and exploding upward through the $10.00 mark, during and after the 2016 elections. Curiously, over the previous three quarters the company’s earnings surprised to the upside, 466.67%, 350%, and the week before the Hillary-and-Donald contest, 200%. Markets yawned at these earnings surprises, but yawned least about the last one, which was the smallest of the three. On December 21, 2016, it blew through the $14.12 IPO level and didn’t look back, reaching a near-term high of $21.00 on Inauguration Day. It finally fell back below IPO price on March ”Russia, Russia, Russia” 27th, 2017 to $13.80 (after an earnings surprise to the upside, of 94.44%), and then did something weirdly conventional: It reported earnings of 36 cents per share, a 16.13% surprise to the upside, and the share price gapped up at the open by two whole dollars, which is what we normally expect to happen when companies report better-than-expected earnings.
The options chain is nothing to write home about. Typical bid-ask spreads are 50 cents to $1.10 and volumes are very low, with strike prices spread out over $5 increments. I can do better trading options on penny gold and silver stocks, and I lose money doing that.
It’s clear that HIIQ is a politically-driven stock. It’s next earnings report is expected August 14th. But it’s price depends primarily on the legal status of it’s products. A state whose laws mandate it’s residents to buy their health insurance from a politically-favored corporation, won’t list HIIQ on it’s insurance exchanges. And the recent Executive Order from Mr Trump, commanding the IRS to cease collecting the penalty for the offense of not being able to afford the coverage that the ”Affordable Care Act” defines to be ”affordable”, probably has a great deal to do with HIIQ’s ability to collect premium income. People who can’t afford the allegedly-affordable Obamacare insurance, may be buying HIIQ’s coverage
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