Below is a brief note written by CEO Keith McCullough:
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With Healthcare being a long in Quad 4, and one of our Best Ideas (Institutional Research product) on sale today (ANTM -2%), it's a good time to review why Healthcare analyst Tom Tobin went bullish on Anthem back in May. This is what he wrote: OVERVIEW The volatility of the last several weeks surrounding #M4A and a host of other bipartisan attacks on the Health Care Industry have opened up an opportunity to get long the other side of our rebate trade and short in UNH. Anthem has long suffered at the hands of the large PBMs, whether it was their partner (supposedly) ESRX, or a competitor like UNH. Aggregating drug spending and extracting rebates was a never a core competency that ANTM developed, until now. With changes in policy that governs rebates coming in 2020, Anthem should finally be on a level playing field. Our view is less rebates for others will lead to greater market premium parity and incremental enrollment share gain for ANTM. Looking back, ANTM enrollment has tread water while UNH accelerated. In our view, ANTM is starting IngenioRx, their new in house PBM, at exactly the right time. Assuming premium differences narrow and ANTM can take Medicare Advantage +/- PDP enrollment, every point of share is worth ~$1.00 to ANTM EPS. Buy when they're for sale. Don’t chase, |
