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CRH PLC T.CRH


Primary Symbol: CRH

CRH PLC is a provider of building materials solutions. The Company integrates building materials, products, and services by providing them to customers as complete solutions. Its segments include Americas Materials Solutions, Americas Building Solutions, Europe Materials Solutions and Europe Building Solutions. The Americas Materials Solutions segment provides solutions for the construction and maintenance of public infrastructure and commercial and residential buildings in North America. The Americas Building Solutions segment manufactures, supplies, and delivers solutions for the built environment in communities across North America. The Europe Materials Solutions segment provides solutions for the construction of public infrastructure and commercial and residential buildings to customers in construction markets in Europe. The Europe Building Solutions segment combines materials, products, and services to produce a range of architectural and infrastructural solutions.


NYSE:CRH - Post by User

Comment by graffiti99on Jul 14, 2017 6:23pm
246 Views
Post# 26471567

RE:New shorts take a ride today, they come and they go......

RE:New shorts take a ride today, they come and they go......
Millennial2000 wrote: First, hat off to Investor22. As a die hard long, you are the first and only poster here making a grand concession with dignity today. Good luck to you with your other investment.

The question facing investors now is this:

I am the first to post here several days ago that I proudly short the stock. So let me look at the situation from the short and longer term stand point:

1. For short term traders, should they still short or turn to bet on a technical rebound? Personally I believe the risk to short depend on whether you have been, like me, shorting since sp was $8.5 and higher. If so, then you have more powder to keep shorting with the QR is fast approaching. The downside obviously is not done. That CRH may come up with some kind of clarification to their future revenue growth and potential acquisition is unlikely in the current blackout period (for Q2). A rebound to a small extent is possible but It won't last as more people will take the opportunity to unload either for good or for a quick profit after buy in at around $4.70. The market sentiment is so bad that any uptake from here could very well be a dead cat bounce. 

2. For those who thinks of taking a long position should wait for the storm to subside. No doubt in my mind the US healthcare bill and reimbursement rates issues will linger for a much longer period of time than any of us can imagine. Even if this sp appears cheap to some the uncertainty is not going away. The charts is so horrible that requires any one with great endurance and patience to ride it out. It may worth the wait at around $3 and certainly not at this closing price. 


Millenial2000, I must concede the shorts have control and have ruled the day. You make excellent points. I myself am a long and still hold. However, I see further selling in the short term, as you say caused by the black out period and the margin calls which will happen early next week. By the time the dust settles, we could experience any number of short term problems, such as accounting irregularities, and before you know it, we're in tax-loss selling season so dare I say, the shorts may have a stranglehold on this until December...? They may. (ugh).

For longs, here is the dirtiest of balance sheet analysis:

current assets: 31
current liabilities: 17

total assets: 230
total liabilities: 146

The company is not going under...

Regarding the rate decrease bad news, see transcript from Ed Wright from April. He said:

"First, with respect to anaesthesia reimbursement rates, like other medical products or services offered in the United States, reimbursement rates can impact our business. With respect to GI anaesthesia, although the Centers for Medicare and Medicaid Services, known as CMS, has stated that it is re-examining the relative values of the primary billing codes used for anaesthesia furnished in conjunction with lower GI procedures, it’s important to note that these rates did not change upon their initial review. CMS also stated that it will not propose any future changes to the valuation of these codes until it receives more input from its stakeholders. The reason for the review of the codes is that there has been an increase in the frequency of anaesthesia services reported during various colonoscopy procedures, which is a direct result of changes in coverage and payment policies of CMS to encourage colonoscopies.  Like many healthcare providers, the U.S. federal and state governments want to encourage people to get colonoscopies to improve patient care and save costs through the early detection and treatment of colon cancer. We believe the re-examination of anaesthesia codes is positive. Standard of care in colonoscopies is changing and the use of deep sedation is part of that change.  We expect that the full CMS examination process will result in no change to the reimbursement rates. Part of our expectation is based upon the work of the RUC committee, one of the primary bodies involved in the billing codes review process. This important committee is on record suggesting that the typical patient vignettes, which is the description of the work required before, during and after the procedure used to value the billing codes, are no longer representative of current medical practices for anaesthesia.  For this reason, it recommends that the codes are resurveyed based upon updated patient vignettes."

Ed expected no increase, Ed got it wrong. But if you read this a few times and take the rate decrease, you can likely see that the colonoscopy is an essential tool in the fight against what is a very popular cancer. If you're a government health policy advisor, it makes sense to ensure an optimal rate to ensure the procedure remains standard of care and is accessible. Full on colon cancer is a lot more expensive on society than screening and treating early. So lowering the rate I think ensures access to the screening procedure. But - the silver lining is that demand for CRH services is confirmed and may increase.

Sources say medicare only makes up 15-20% of CRH billing and that private payors pay more so CRH revenues and margins do not move down by the factor of the CMS adjustment. So is the selling an over reaction of the royal order? Realistically, I would have to say no. I think insurers will adjust down too and gone are the days of capturing 4x the medicare rate. How much, I don't know. It seems to me the CMS adjustment would be the rationale of the private insurer to lower their rate but I could be wrong. So, I feel demand for CRH services was just confirmed, margins however will be compressed a bit.

What to do, what to do..I like owning shares in businesses that have long horizons - a decade or more if possible. The demographics of an aging population relying on colonoscopy was part of my thesis. I'm willing to hold and maybe buy a bit more, but I need to see how CRH management deals with this and would like to see growth numbers. Donville once upon a time called it the finest small cap stock in Canada to buy, $25 in 3 years time. A much higher mountain to climb now to attain that share price.
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