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Why Community Health Systems Inc (CYH) Shares Jumped 15% in 4 Days

Published on March 23, 2016 at 9:27 pm by Inan Dogan, PhD in Hedge Funds
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Community Health Systems Inc (NYSE:CYH) shares went up more than 15% since last Thursday including today’s unexplained 2.3% gain. Other hospital stocks such as Tenet Healthcare Corp (NYSE:THC) which lost 0.8%, LifePoint Health Inc. (NASDAQ:LPNT) which was up only 0.05%, and HCA Holdings Inc. (NYSE:HCA) which lost 0.3% today didn’t come close to Community Health Systems’ recent gains. We believe we found two explanations.

First Conan Laughlin’s North Tide Capital disclosed today after 4 pm a 3.5 million addition to its Community Health Systems position. North Tide Capital owned 3 million CYH shares at the end of December. Hedge funds sometimes share their large trades with other hedge funds before they disclose the transactions in a regulatory filing. This is purely speculation but North Tide might have done this or the news of North Tide’s large purchase might have leaked. By the way, North Tide completed its 3.5 million share purchase on or before March 17th.

The second explanation has something to do with Community Health Systems’ Quorum Health Corporation (NYSE:QHC) spin-off. Yesterday, Quorum Health Corporation announced a 1.1% increase in adjusted admissions between January 1st and March 21st. This is good news for CYH which reported a 1.5% decline in adjusted admissions in Q4. Community Health Systems shares declined more than 20% on February 16th after reporting disappointing Q4 results. Yesterday’s announcement may mean that Community Health Systems’ other hospitals may be experiencing an increase in admissions too.

Since CYH shares have been increasing for a few days now, we believe large purchases by funds over the last few days explain the recent strength in CYH shares. You can check out the details of North Tide Capital’s filing below:

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
North Tide Capital Master 0 5,700,000 0 5,700,000 5,700,000 5.1%
North Tide Capital 0 6,500,000 0 6,500,000 6,500,000 5.8%
Conan Laughlin 0 6,500,000 0 6,500,000 6,500,000 5.8%

Page 1 of 8 – SEC Filing

SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. )*
COMMUNITY HEALTH SYSTEMS, INC.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
203668108
(CUSIP Number)
March 17, 2016
(Date of Event which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this Schedule is filed:
[ ] Rule 13d-1(b)
[x] Rule 13d-1(c)
[ ] Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.  Beneficial ownership information contained herein is given as of the date listed above.
The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

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