Triad Tug of War

Depending on whom you talk to, Triad (TRI) is either the opportunity of a lifetime or a disaster waiting to happen.

The hospital chain has tried to set itself apart with an aggressive growth strategy involving joint ventures with nonprofit hospitals and physician groups. But shares have fallen sharply over the last year and a half as the industry has been hit hard by rising nonpayment rates among uninsured patients, among other things.

Now some of the company's critics are starting to wonder when its expensive strategy will pay off. Triad's biggest holder, 6.2% owner TPG-Axon Capital Management, says in a recent filing that Triad "has spent all available funds on expansion, resulting in negative free cash flow and dilution to shareholders."

TPG-Axon wants the company to implement new controls, focus more on its existing assets and to start buying back its own stock.

But that's not the only criticism being leveled again Plano, Texas-based Triad. Banc of America analyst Gary Taylor, who rates the stock sell, says the company is playing accounting games that make its earnings look better than they really are.

A radically different view comes from Sheryl Skolnick, senior vice president of CRT Capital Group. Skolnick, who recently upgraded Triad to buy and believes the stock could go to $48.50 from a recent $38, shakes off the accounting talk.