Beverly Enterprises (BEV)

Company. Beverly Enterprises is a healthcare provider headquartered in Fort Smith, Arkansas. It has three lines of business providing nursing homes, home care, and rehabilitation therapy. (company website)

Buy. I bought Beverly Enterprises at the end of August, not long after the stock had broken the $6 level. Looking back at the chart, this was about a month too late. BEV had broken $5 in July, pulled back, and then surpassed its previous high.

This purchase seemed starcrossed from the beginning. Not long after I bought, the company announced a convertible bond issue, and Moody's changed their outlook on the company to 'negative' on 19-Sep. When the market opened the following week, BEV stock began to slide gently downward, helped along, no doubt, by the general end-of-September swoon that befell the market.

A month later, Beverly announced that an internal audit had revealed billing irregularities and the government issued a subpoena. That resulted in a very high-volume sell-off that day, but the price didn't fall much. In fact, that seemed to be the beginning of a gradual climb back up.

Sell. In recent days, BEV has approached the $7 level only to lose ground again. The company is due to report earnings tomorrow morning before the market opens. Although the indicators are once again positive, my instincts tell me that it would be better to take a small, sure gain than to risk another decline as a result of failing to meet Expectations or, even worse, the other shoe dropping on the billing question.

I know, "No guts no glory." On the other hand, profits — however modest — always beat the alternative.