Shareholders of Healthscope Ltd (ASX: HSO) may be shocked to see their shares trading 7.4% lower today at just $2.51. Here are three reasons why the company may be taking such a beating today…
1. Dividends
As of today, Healthscope's shares are trading without rights to its 3.7 cents per share final unfranked dividend, announced last month. This should have, theoretically, dragged the shares 3.7 cents lower today. By comparison, the shares have fallen 20 cents, meaning there are other forces at work on the company's share price.
2. Private equity selling
In an announcement to the market this morning, Healthscope said that CT Healthscope Holdings L.P., which is controlled by private equity firms TPG and Carlyle Group, had sold 350 million of its shares via an underwritten block trade.
The Business Spectator has reported that the shares were sold for $2.70 – a discount of 1 cent from yesterday's closing price. This alone shouldn't have had much of an impact on the share price, but investors may look at the fact that the two firms sold down nearly half of their stake as a sign they're no longer as confident in achieving market-beating returns.
3. A savage market
The most obvious explanation is the sour turn the broader market has taken. In what has been a savage selloff, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has crashed 130 points, or 2.5%, to just 5,090 points, acting as a heavy drag on each of the market's sectors.
Primary Health Care Limited (ASX: PRY) and Ramsay Health Care Limited (ASX: RHC) are also down 1.7% and 2.3% with the S&P/ASX 200 Health Care (Index: ^AXHJ) (ASX: XHJ) index as a whole down 2.5%.
Healthscope is a high-quality business and one that should benefit from the shift towards private healthcare, as well as from Australia's ageing population. Today's selloff could present a reasonable opportunity for investors to begin building a position in the company.
