TRADE INSTRUCTIONS
Date: March 1, 2017
Name: AmTrust Financial Services
Symbol: AFSI
Type: Close
Limit: Sell at market 

TRADE RATIONALE
AFSI dropped sharply this week after the company announced (see “Update on Anticipated Timing of 10-K Filing” at bottom of document) it had “identified material weaknesses in its internal control over financial reporting that existed as of December 31, 2016″. Exactly what those “material weaknesses” are has not yet been disclosed, but apparently a lot of shareholders aren’t waiting around to find out.

Since AFSI closed beneath my stop price I have to sell it, and its target holding period is up in two weeks anyway so I don’t see much upside potential between now and then given the confusion over what this statement may imply. However, since the company also stated that it “expects to make immaterial corrections to errors in its financial statements” for prior year results, the stock should eventually recover if that turns out to be the case, and it may be worth rolling call options another month or two to see how this plays out.