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Wednesday,
June 17, 2009
(Cont'd from
above)...
Jim (cont'd):
Jim:
You want to know
what I think the
reason for this
rally is, in the
face of the immense
amount of publicity
about the havoc it
will cause among the
stocks in the
group?...
Frankly, it has
nothing to do with
the ways of
Washington, and
everything to do
with the ways of
Wall Street... And,
to put it simply,
Wall Street, which
has been punishing
whole sloths of
healthcare since
President Obama's
victory, now has the
single-most
important weapon it
needs in order to
buy a stock... in
order for you to
pull the trigger! It
has clarity...
clarity...
For months now,
we've been on edge
trying to figure out
what healthcare
reform will really
mean. Will it be
like Bill Clinton's
nursing home reform?
Where Clinton
pushed, and
succeeded, to
destroy the industry
by changes in
government
reimbursement? Or
will it be more like
HillaryCare, where
the fight seemed
endless?...
Which will it be?...
Well I think, this
week, we found out
the answer...
Somewhere in
between.
Senator Clinton's
never made it. She
didn't have the
support of the
Republicans, and you
got one of the
greatest
opportunities we
have ever seen to
own a group... ever
seen in my career...
Because, when
Clinton was done
bashing it, it was
selling at 9.5 times
earnings...
That was when we got
clarity that not
much was going to
happen to wreck the
profit margins of
drug companies...
the price people
immediately were
willing to pay when
we got clarity was
back to what they
paid before... 13-14
times earnings.
Sure enough, because
Obama's more popular
than Bill Clinton
was at the time, and
because we have a
democratic house and
senate, and because
it was the health
maintenance
companies - not the
drug companies -
that are more on the
firing line, we're
getting a classic
moment for that
group this time...
the same as when we
had the extreme
punishment meted
into the drug
companies in the
90s...
And that's why
people are buying
drugs and healthcare
today. That's the
reason for the
rally... clarity.
Not just because
people are worried
that the economy is
softening... which
is the reason I
heard for the rally
all day.
Now you know that I
have not been a big
fan of these HMOs,
because of what
they've done to
shareholders... I
have railed against
Cigna, United
Health, and Aetna as
companies that have
spent fortunes
buying back stock at
high prices... and
in good conscience,
I cannot come back
here now and
recommend them to
you... nor am I
saying that Obama
will be great for
the HMOs.
But there is another
company loaded with
catalysts that I see
moving up now that
we know that it's
not going to be so
horrible... and this
company, while well
off its lows, can be
justified as the
company that will
travel the way the
drug companies
traveled back in the
1990s when they got
clarity on their
fortunes from
Washington.
And that company
is...
WellPoint Inc. (WLP).
Here's the bottom
line...
▼ ▼
▼ ▼
▼
 The
Bottom Line!:
Clarity gave us a
great drug stock
rally in the early
1990s when we found
out that Clinton's
bark was worse than
its bite. Clarity is
now doing the same
to the health care
maintenance
organizations. My
play?
WellPoint Inc. (WLP).
And, even though it
has already moved up
a great deal from
its $27 low, I think
this stock could go
to the high $60s,
just on clarity
alone. And if you
see healthcare
reform be pushed
back or stalled
entirely, I think
you could have a
double on your
hands.
[verbatim recap]
[end of segment]
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*Note: Bank of
America is a
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