Monday, August 4, 2008

Belski's "musings" on managed care

Brian Belski of Merrill Lynch, came out with this observation today saying that the managed care companies have had an "11% out-performance of the S&P" the last few weeks.

That's Wall Street. Being descriptive. Telling you after it happens.

I prefer it to be "prescriptive." Telling you before it happens.

Let's check prices today:
HUM 47.35
AET 42.06
UNH 29.16
WLP 54.14

On July 23, you had the story here.

But WellPoint (WLP 48.75) reports today. They'll beat their numbers, just like United Health (UNH 26.21) did yesterday. Aetna (AET 36.21) and Humana (HUM 40.60) can be bought also.
The panic in these stocks is over!

Here's the script that Wall Street will spin. MCO costs (Managed care costs) were miscalculated and now they are under control. When the economy recovers, more employees will be working, and thus more revenue for the companies, eventually boosting MCR's (Medical Cost Ratio's)blah blah blah....

Or you can just disregard Wall Street and read the following paragraph.

HUM moves first and fast because it is the "derivative" play on WLP's earnings. AET is next, and UNH picks up at the rear. The play on UNH is with longer dated calls as they have very little premium.

How tough is that?

And sometimes, I just give you the script!

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