The worst (let’s repeat… worst) sector in the S&P 500 this year has been Healthcare. It’s not even close. Check out the year-to-date performance:
- S&P 500: +10.1%
- Healthcare (XLV): -3.9%
The next worst performing sector in 2016 is Consumer Staples (XLP) which is up +2.9%, a gaping 7 percentage point difference over Healthcare.
Still, there is still plenty juice out there for savvy Healthcare short sellers. Hedgeye CEO Keith McCullough and Healthcare analyst Andrew Freedman discuss our top four shorts in the sector. These include:
- Cerner (CERN): $16 billion supplier of healthcare information technology (-20% year-to-date)
- HCA Holdings (HCA): $28 billion hospital operator (+9% year-to-date)
- Mednax (MD): $6 billion physician services provider in the subspecialty of pediatric and maternity-based care (-7% year-to-date)
- Allscripts Healthcare Solutions (MDRX): $2 billion healthcare information technology provider (-32% year-to-date)
In particular, Freedman discusses why Cerner could suffer “death by 1,000 cuts” over the next three years as “the market moves away from them.” McCullough and Freedman also explain why Biotech stocks (IBB) are starting to look interesting. IBB is down -21% year-to-date.