ADEPTUS DROPS SHARPLY in the last two weeks.
We received a few letters via email recently about Adeptus (ADPT: $54, down $3). We added the stock on April 1st at $54 and it closed today at $54, but in the meantime it went to $70 on April 27th, down to $58 on May 9th, to $73 on May 24th and 27th, and now down to $54.
We know the stock is highly volatile. Â The last company news was on May 31st and we covered that in our last News Flash. Â In that News Flash guidance from management was raised and we stated the company was registering 2.7 million shares of insider stock (original investors and some other later stage investors as well). Â The stock has been under pressure since then. The worst day was June 1st. Â The deal was priced on June 2nd at $62.00. Â However, that is a fairly large amount of stock to be absorbed (Goldman Sachs as the lead underwriter did a poor job supporting the aftermarket). Â
We liked this stock at this price when we added it to the Special Opportunities Portfolio in April.  Since then revenues and earnings have exceeded estimates and management has raised guidance for 2016 and 2017. Analysts are becoming a bit more bullish on the firm’s prospects in both the short and long term. In fact, over the past month, current quarterly estimates have risen from 56 cents/share to 57 cents/share, while current year estimates have risen from $2.61/share to $2.69/share.
The fundamentals are good and if we learn any information to the contrary we will ring the alarm bell immediately. We like the company and believe the stock will move much higher over time. But if the volatility is too much for you, get out of the kitchen.