Another factor many are forgetting is that these health-benefit providers will simply jack up premiums well ahead of the implementation of this bill. Take Aetna Inc (NYSE:AET), for example, which boosted premiums by as much as 21% in some states over the past year. Aetna Inc (NYSE:AET) has proved time and again that pricing power lies with the HMOs regardless of what policymakers of the PPACA would like to believe. This would bode well for UnitedHealth Group Inc. (NYSE:UNH), which can simply raise its premiums to cover medical cost inflation.
With a growing international presence and a well-diversified business, I wouldn’t suggest betting against UnitedHealth Group Inc. (NYSE:UNH).
Being proactive has its perks
It’s definitely not difficult to see why short-sellers are piling into Endeavour Silver Corp. (CAN) (NYSE:EXK) Silver, with the spot price of silver having fallen by roughly 55% from its peak. With labor costs rising and spot prices falling, it wouldn’t be out of the question to anticipate that Endeavour Silver Corp. (CAN) (NYSE:EXK)’s bottom-line profit estimates will fall. However, Endeavour is implementing cost-saving plans and focusing its efforts on the recommissioning of its newly built El Cubo plant to drive growth, and it should, therefore, be able to stave off much of the pessimism surrounding the sector.
Announced earlier this month, Endeavour Silver Corp. (CAN) (NYSE:EXK) will be reducing its 2013 capital investments budget by 20%, initiating layoffs, and reducing its administrative expenses, with the entire management team furloughing 10% of its compensation. Investors often forget that miners can cut costs and run lean while still turning a profit.
Then there’s the company’s El Cubo mine, which it purchased in 2012 from AuRico Gold Inc (NYSE:AUQ) with a combination of its own shares and cash for up to $250 million ($50 million is contingent on mine productivity over a three-year period). As fellow Fool Christopher Barker has commented previously, AuRico Gold Inc (NYSE:AUQ) did a disastrous job of managing the El Cubo mine, which leaves Endeavour Silver Corp. (CAN) (NYSE:EXK) with a tremendous opportunity to reap the rewards of AuRico Gold Inc (NYSE:AUQ)’s failures.
With Endeavour Silver Corp. (CAN) (NYSE:EXK) having improved total production for eight straight years, I think today’s share price is ludicrously inexpensive and would strongly suggest not shorting at these levels.
Foolish roundup
This week’s theme is all about the success of being proactive. Both Endeavour and UnitedHealth Group Inc. (NYSE:UNH) are doing a good job of trimming costs where they can while positioning their companies for success down the road. The same can’t be said just yet for SolarWinds Inc (NYSE:SWI), which seems confused over why license growth appears to have slowed.
What’s your take on these three stocks? Do short-sellers have these stocks pegged, or are they blowing smoke? Share your thoughts in the comments section below.
The article Shorts Are Piling Into These Stocks. Should You Be Worried? originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends UnitedHealth Group.
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