Life Partners Holdings Inc. (NASDAQ: LPHI) is a specialty company engaged in the secondary market for life insurance generally known as “life settlements”. The practice of life settlement involves the purchase of life insurance policies at discounted or face value for investment purposes. The policyholder sells his or her policy and gets an immediate cash payment. The purchaser takes ownership interest in the policy and gets the death benefit when the insured dies. There are any number of reasons that a policyholder may want to sell a life insurance policy ranging from not being able to afford the policy to wanting to invest in a new policy. Although the secondary market for life insurance is a relatively new one, it has been in the making for over a hundred years. This is big business and LPHI is one hot small-cap stock within that segment of the market.
Indeed, shares in the company are up over 16 percent for the first two months of 2013. The stock has been trending in a tight consolidation pattern with a low of $2.60 and a high of $3.68. This pattern has formed an enormous base for shares in the company and the stock is beginning to move within range of a breakout trade above the upper end of its most recent range. Investors should look for long-biased trades in Life Partners as it moves above some near-term overhead resistance levels with high volume. Also, look for volume that hits near or above its three-month average action of 82,610 shares. In fact it appears that LPHI is already in breakout mode. Any high-volume move above $4.35 would then put $5.50 to $6 into range for shares of LPHI and it is already making a strong move in that direction.
Some advice before you throw money in this direction. Look to purchase LPHI off any weakness to anticipate that breakout and then use a stop that sits close to some near-term support at $2.68 to $2.60 a share. You can also buy off strength once Life Partners takes out those breakout levels with volume and then merely use a stop that sits below the company’s 50 day moving average at $2.68 a share. Note that shares are currently trading for $3.68 and the company has a market cap of $71.449 million.
So the reasons for putting this play on your radar; this stock has a pretty nice short interest as a percentage of its float at 8.7 percent, we are apt to get a nice little short-squeeze if it triggers soon and the price is right. Remember to do your homework prior to investing in any stock but this one currently looks like a winner.