Boston, MA 05/06/2014 (wallstreetpr) – All was going on well for the stock of Athenahealth, Inc (NASDAQ:ATHN) until a hedge fund manager issued bearish a remark on the stock.
The bearish bet came from David Einhorn, a talkative hedge fund manager, who called on investors to short shares of the electronic healthcare records provider because the stock belongs what he calls “bubble stock” category. According to the investors, bubble stocks are good in the sense that they usually surge, but when the rise stops they become falling knives, and that is what is likely to happen with Athenahealth.
Shares of the company peaked at 206 in March this year but have lost almost 15 percent of their value since the bearish remarks came out Monday.
Mr. Einhorn, the founder of hedge fund Greenlight Capital Inc, bets that the stock may plummet 80 percent before long and in that case advises investors to protect their value by selling the shares. The warning over the lack of upside potential in the stock came during the Sohn Investment Conference. The conference includes presentations from investment experts to paid attendees. The collections made from the attendees go to support pediatric cancer projects.
Reasons for the bearish remarks
According to Mr. Einhorn, Athenahealth, Inc (NASDAQ:ATHN) is unlikely to attain quick success in the U.S. healthcare space where it plays based on the competition presented by other players such as Epic. The concern is that hospitals are unlikely to embrace the company’s electronic records handling software in the short run.
In addition to the competition and concerns among potential clients, the company’s software solutions also seem highly priced, according to Mr. Einhorn. As such, there seems to be very little support for the stock of Athenahealth, Inc (NASDAQ:ATHN) in the current arrangement or the near future.
Athenahealth defend position
According to Athenahealth, Inc (NASDAQ:ATHN) officials nothing can be further from the truth than the assertions made by hedge fund manager Einhorn about the company’s prospects. The company maintains that it is not only fully committed to creating value for shareholders but is business model that the fund manager attacked is already showing encouraging progress.
In any case, the company’s CEO Jonathan Bush believes that Athenahealth, Inc (NASDAQ:ATHN) has all the opportunities to become the backbone of the U.S. national health information.
However, Mr. Einhorn said he does not believe that Athenahealth, Inc (NASDAQ:ATHN) is in any way a bad business, expect that the risks in the stock seem high for the existing investors. And that the risks are being ignored, which is not good from an investor standpoint.
