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Treace Medical Lawsuit: Fact, Fiction or Both?

Consider these three angles following the shareholder alert over the Treace Medical Investigation last week.


1. Fact

The double-edged sword of aggressive direct to consumer advertising, and questionable billing/coding suggestions to physicians to justify the higher cost of the “lapiplasty” kit finally caught up to the company, as reported by Culper Research.


2. Fiction

With a billion dollar plus valuation, Treace Medical is too large for an acquisition/merger, yet its portfolio is also too small to fend off long-term industry competition.


Let's entertain, for a moment, the possibility of a “short with an option”: Traditionally, you buy stock first and sell it later. With a "short with an option," you sell borrowed stock first and buy it back later, for cheaper. It may seem complicated, but it's an easy way to hedge against long positions by “buying” for less, in anticipation that market uncertainty and fear in the future will reduce the price down further – yielding a large return on investment long-term.


In other words, capital and growth can be generated without any of the associated traditional costs and loses. Click here for more on “shorting.”


3. Both

Success has many enemies, and often welcomes unwanted attention. Perhaps the investigation by Holzer & Holzer, LLC, an ISS top-rated securities litigation law firm, is yet another cautionary example for other companies currently focusing in on and harnessing direct-to-consumer advertising and social media to inflate their annual ROIs, simultaneously creating opportunity for market investors.

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