Since mid-May I have mentioned EVHC severalj times in my videos and webinars.
The reason is that it has been forming a compelling post-earnings OVI setup.
However, week or so after I first mentioned the stock, there has been a gathering rumour that the company may
be an acquisition target for KKR.
That’s great you might say!
Well, It is and it isn’t …
If such a buyout does occur the OVI will have spotted the opportunity before the rumours emerged and we’ll make a handsome profit.
That part is great, though typically we prefer it when no such rumours ever emerge prior to a takeover.
If such a buyout does not occur now, then it is likely that the stock will lose its mojo and fall down.
Why does this actually matter?
It matters because typically the OVI is identifying knowledge that is held privately or by very few insiders or professionals who are secretly using leverage to their advantage. This is why the OVI gives you so much of an edge.
The challenge with EVHC right now is that whatever “hidden” knowledge there may have been with EVHC has now escaped into the public domain and is almost certainly being speculated upon by not-so-clever players.
This means the OVI may be reflecting not just professional / insider activity, but other speculative trading activity from unprivileged traders playing this stock at this time.
Time will tell of course, but the result of all this means my initial enthusiasm for EVHC is somewhat dampened, and it will need careful trading to take advantage of an move up, should it occur.
Bye for now