CI sports an amazing 17% run today after it stampedes earnings estimate by reporting pro forma earnings of $1.45 vs consensus of $1.17 (earning release). With the climb, the stock has greatly surpassed my price target of $52. I decided to dispose all my positions because the current price does not offer sufficient margin of safety to compensate for the risks. I sold all my 100 shares at $56.291 each this morning. After $11.26 in commission and SEC fee, the net proceed is $5,618. It had been just a bit over a year after I bought the shares on October 25, 2002. The ARR for this roundtrip is 61%.

Admittedly, the potential sale of the retirement division may resolve some liquidity and ensure more dividend stability, although the impact is already somewhat reflected in the price.

In addition, before the sale I read the research note this morning from Smith Barney, which upgraded CI from 2H to 1H (buy-high risk) and raised price target to $61 (this upgrade itself adds fuel to the impressive climb). While the report raised earning forecast for all the way down to year 2006, I feel it is overly optimistic. I found some of the risks mentioned in the report are not fully justified in the current inflated price:

- Implementation risk: turnaround efforts seems to gain traction, but top-line growth may not be there until 2005.

- Reserves transparency: this greatly bothers me. Cigna is ranked lower than average in reserve revealation. It will be quite easy to manipulate earnings with reserve assumptions.

- Continued risk with run-off reinsurance business

- Dividend is somewhat in danger

- Management turnover

I might sell too early (like in the case of my Sears sale) in front of the upcoming retirement division sales, but the current price really makes me feel lack of safety margin.

Consequences of sale:

- With a capital gain of $2,057, I'm booking a $309 charge to my Tax Liabilities - Incurred account. The floating tax liabilities will be changed accordingly.

- I'll park the money in NetBank Money Market account unless I find some interesting stock ideas soon. This should assist my short-term liquidity.