GSHD Jumps on Q3 Report. Taking partial gains in INSP
The market has started to look iffy lately and today we’re seeing another wave of selling. The pressure is on the bulls to step up and turn things around. Or, at least stop the bleeding. At the moment there are very few bright spots, but we’re fortunate to have one of them in our portfolio.
Yes, I’m talking about Goosehead Insurance (GSHD). The company reported last night and shares are trading up over 10% today after a big beat. Revenue jumped 51% to $32 million, beating by $4.2 million while adjusted EPS of $0.23 jumped 229% and beat by $0.11. Total written premiums placed were up 49% to $301 million, well ahead of management’s guidance. Even better, management raised full year guidance for the second time this year. They now see 2020 total written premiums of $1.05 billion to $1.07 billion, or up 42% to 45%, versus prior guidance of up 35% to 42%. Full year revenue guidance goes to $109 million to $112 million, or up 41% to 45%, which is well ahead of the previous high end of guidance of 41% growth. All in all, it was a spectacular quarter and the company seems to be executing far better than larger competitors. Keep holding. HOLD
Sell One Quarter Position in Inspire (INSP)
Shares of Inspire (INSP) trucked higher this spring and summer but plateaued in early-October and have been trending down since. The stock’s not broken, but as I discussed yesterday as the virus comes back there’s risk of procedures being delayed. With earnings coming out on Monday we’ll have more to think about in the near term, but stepping back and thinking things through here it seems prudent to take a small partial profit just to reduce exposure in case the stock doesn’t react well. Ideally, this is the “wrong” decision, but given the way the broad market is acting I’m OK making a wrong decision if it means locking in a roughly 100% gain on a stock over the last 12 months. SELL A QUARTER