Coventry Health Care Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of health insurance provider Coventry Health Care (NYS: CVH) jumped as much as 10.9% today, with an early spike providing most of the price and volume movements.

So what: The health insurance industry is boiling in general today, as sector giant CIGNA (NYS: CI) decided to buy smaller rival HealthSpring (NYS: HS) for a healthy $3.8 billion. That's a nearly 35% buyout premium, and investors in smaller insurers like Coventry and WellCare Health Plans (NYS: WCG) could make out like bandits if this is the start of a consolidation trend.

Now what: Mind you, it would take a humdinger of a buyer to absorb Coventry's bulk, and the big ones aren't exactly starved for market success at the moment. WellPoint (NYS: WLP) could use some help, but the company sits on a cash-starved balance sheet with plenty of debt and is busy financing a very large share buyback plan instead. Coventry has a lot going for it -- to the point that our Stock Advisorteam made it an official recommendation -- but being a buyout target ain't among the pluses, in my opinion.

Interested in more information about Coventry Health Care? Add it toMy Watchlist.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of WellPoint and Coventry Health Care. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a short bio, follow him on Twitter or Google+ , or peruse our Foolish disclosure policy.

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