A major Community Health Systems shareholder has sold off half its stock over the past two months, cashing in on a price surge that followed an unexpected earning rebound and news that the company's CEO is stepping down.
Singapore-based Shanda Group, led by billionaire investor Tianqiao Chen, sold nearly $110 million worth of common stock in the investor-owned hospital chain across a series of transactions in November and December, bringing its stake down to 12.2% of the company's outstanding shares, according to the Securities and Exchange Commission. That's down from 24% in November, a stake Shanda had maintained since 2018.
This week alone, Shanda sold 3.3 million shares for $28.5 million. In November, the company netted $81.2 million in a pair of transactions that covered 9.6 million shares.
Franklin, Tenn.-based CHS' stock price has been on a streak since late October. The price has risen more than 75% since it started to spike on Oct. 27, the day the company posted its third-quarter earnings, showing much higher net income to shareholders than in the prior-year period, when the company had lost money. The company also announced its longtime CEO, Wayne Smith, was stepping down from the CEO role at the end of 2020.
Brian Tanquilut, an analyst with Jefferies, wrote in an email he thinks Shanda's sales are because of the stock's recent run. "It's profit-taking," he said.
For its part, Shanda spokesman Jason Reindorp said the change in its CHS position is part of broader portfolio adjustments the company is making.
"We continue to believe they're on the right track and have faith that Wayne and Tim in their new positions will do a great job," Reindorp said, referring to Smith's future role as executive chairman and incoming CEO Tim Hingtgen, currently CHS' chief operating officer.
CHS said it does not comment on its investors' stock trades.