This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Stocks That Could Be Trampled

 

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

5. HCA (HCA)  

One of the largest buyouts at the time, HCA was taken private by Bain Capital and KKR (KKR) in 2006 for a total value of $33 billion. The move was the hospital chain's second takeover after a $5.1 billion management buyout in 1988. The 2006 deal was heavily financed by lenders like Bank of America (BAC), Citigroup (C) and Merrill Lynch , who helped raise $23 billion in takeover debt.

After struggling through the credit crunch, Bain and KKR returned HCA to stock markets in a $3.78 billion March 2011 IPO, the biggest U.S. private equity share offering ever. Prior to the IPO, Bain and KKR pulled a May 2010 offering to wait for markets to recover, choosing to use a $2 billion November debt offering to pay their investors a dividend.  

When HCA's offering hit markets at a price of $30 a share, Bain, KKR and Bank of America saw their initial $5 billion equity investment nearly triple as they sold roughly $1 billion worth of shares, to complement $4 billion-plus in dividends they'd pulled from the company and a remaining share stake worth over $11 billion. Stock investors haven't fared so grandly. Since its offering, HCA shares are off nearly 20% to $24.67 as of Tuesday's close, even as the company reported that its revenue grew to $32 billion and profits doubled to $2.5 billion in 2011.   

Overall, HCA is expected to earn $34 billion in 2012 revenue and $1.56 billion in profit, according to analysts polled by Bloomberg who give shares an average price target of $31.68. Seventeen analysts rate HCA shares a "buy," while eight rate the company a "hold." If the company were to see its leverage drop from present levels, it could seek to use its cash for growth acquisitions, share repurchases or special dividends, notes Bank of America Merrill Lynch analyst Kevin Fischbeck in a Mar. 1 note.  

Bain Capital holds over 89 million shares or 20.5% of the company's float, according to Bloomberg compilations of Securities and Exchange Commission filings. KKR holds a 87.5 million-plus share stake representing 20% of HCA's shares. In September 2011, Bank of America sold 80.2 million of its shares to HCA, in a repurchase move worth $1.2 billion. Meanwhile, roughly six years after their initial investment, Bain Capital and KKR are likely closing in on an exit strategy as the company's shares are expected to remain at its IPO price in coming quarters.

2 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,173.78 -105.96 -0.61%
S&P 500 1,992.17 -18.23 -0.91%
NASDAQ 4,515.0960 -64.6930 -1.41%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs