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Every once in awhile, I break all of my rules and do something like I have done in the past, go with my gut :). My trading portfolio is down today because of a drop in Kinetic Concepts (KCI) which as I write, is trading at $58.23, down $(4.77) or (7.57)% on the day.
Early this morning the company released 3rd quarter 2007 results. As reported:
NEW YORK (AP) -- Shares of medical technology company Kinetic Concepts Inc. sank Tuesday despite strong third-quarter earnings and sales, and an increased full-year outlook.
Before trading began, the company said its profit grew 21 percent for the quarter as sales of its vacuum assisted closure devices increased. The results surpassed analyst expectations, and Kinetic Concepts raised its fiscal 2007 profit and sales forecasts.
The San Antonio company now expects to earn between $3.20 and $3.30 per share for the year, on $1.58 billion to $1.6 billion in revenue.
However, shares dropped $6.41, or 10.2 percent, to $56.59.
The stock price has nearly doubled in the last year, and Jefferies & Co. analyst Mark Richter said investors who have taken short positions may be selling. The company reported a large profit margin increase during the quarter, and sales of its products, which treat bed sores and lung fluid buildup, will stay strong, he said.
"We believe the upward guidance revision will prove conservative," he said in a telephone interview. "All things from our perspective demonstrated a very good quarter, so we are surprised to see the sell off."
I mean the company reported good results, beat expectations, and then raised guidance. For me that's about as 'good as it gets'. I haven't yet sold any shares of my initial position. So as this stock declined, on what appeared to me to be a totally irrational basis (?), I chose to use my brain for a change (?) and added 280 shares (!) to my 140 share postion of Kinetic Concepts. I purchased the shares at $57.99.
KINETIC CONCEPTS (KCI) IS RATED A BUY
Wish me luck. I always reserve the right to act arbitrarily in managing my portfolio. Usually, it is exactly the wrong thing to do. But what is a person supposed to do when the market takes good news and turns it inside out? Maybe I am just missing something. Then again, time will tell, won't it!
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Updated: Tuesday, 23 October 2007 2:21 PM CDT