“History rarely yields to one person, but think and never forget what happens when it does.” – Said CEO of Apple Tim Cook
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
December 19, 2019
Fiat Lux
Featured Trade:
(WHY THE REAL ESTATE BOOM HAS A DECADE TO RUN),
(DHI), (LEN), (PHM), (ITB)
(PLAY IT SAFE WITH ANTHEM), (ANTM), (CI)
Mad Hedge Biotech & Healthcare Letter
December 19, 2019
Fiat Lux
Featured Trade:
(PLAY GUARDANT HEALTH FOR THE LONG TERM), (GH)
One of the notable lessons in value investing is this: boring is oftentimes a good thing. Tangible proof of this principle is to be found in Anthem Inc (ANTM), which is a virtually inconspicuous stock but is performing satisfactorily for its investors.
Here’s a brief background on this relatively obscure stock.
Anthem is offering various healthcare plans to corporations and individuals. The holding company also provides its services to Medicare and Medicaid markets, which are comprised of approximately 40 million Americans.
Aimed at becoming a one-stop-shop for its clients’ insurance needs, the company’s offerings include dental and vision services and life insurance. To date, Anthem is ranked among the top five healthcare and insurance providers in the United States while it placed No. 29 among Fortune 500 companies. Clearly, this “unknown” stock is one of the industry leaders today.
Where does Anthem currently stand?
While the healthcare industry seems to be struggling with countless changes courtesy of the Trump administration, Anthem appears to be well prepared to handle whatever comes its way.
Here’s a case in point.
Anthem had to retrench on their Obamacare services last year. Despite that, the company still impressed its investors with a 3.8% improvement in its operating revenue year over year. That's not bad for an insurance company.
How did the company manage to recoup its losses? The lost revenues from Obamacare were counterbalanced by a boost in new insurance premiums along with an increase in the number of Medicare enrollments.
Since its fourth-quarter results in 2018 pleasantly surprised investors and analysts alike, it’s anticipated that Anthem will perform just as well or even better this year. So far, predictions for Anthem’s performance in 2019 remain bullish.
The stock market noticed. Since October, the stock has gone ballistic, rocketing an impressive 30%.
However, no company is perfect. One major red flag for Anthem is its ongoing lawsuit against another healthcare provider, Cigna (CI), over their botched merger plans. If the legal battle continues, then Anthem is poised to incur substantial long-term expenses.
Bottom Line
All in all, Anthem is a solid stock that offers an attractive combination of stability and continuous long-term growth in anyone’s portfolio. Thus far, the company has performed well and managed to provide acceptable financial results to its investors.
Although its business has not grown by leaps and bounds, its modest growth in the past years and the projected consistency in its stock performance in the years to come make Anthem a reasonable investment.
Buy Anthem on the next decent dip.
The company that cures cancer will be the next Apple (AAPL). That is the consensus of most scientists and investors out there. The question is: which of the hundreds of players out there should one be picking up today?
Guardant Health employs a unique approach.
The company believes the key to conquering cancer is unprecedented access to its molecular information throughout all stages of the disease. It is developing a solution through tests that require only a blood sample.
Guardant’s blood tests are enabling timely therapy selection for patients with cancer while we also advance programs for recurrence detection and early cancer detection. In addition, it is working together with pharmaceutical companies to discover and understand new treatment approaches that lead to better outcomes for patients.
So far, GH has exhibited a great health rating. Unfortunately, there remains anxiety over its profitability. In particular, some investors look at its medium growth rate and feel that this biotech stock is valued expensive.
On the other hand, GH has shown a remarkable growth rate in the previous year. In fact, this oncology-focused company has achieved an impressive revenue growth of 81.85% in 2018.
Looking at the company’s performance and the estimates in the next two years, GH is projected to report a strong growth in its earnings per share. To be specific, its EPS is estimated to jump by 17.24% on average annually.
Meanwhile, the sales of its breakthrough treatments are anticipated to break above $200 million in 2019 alone -- showing off over 125% in annual growth.
To provide more tangible results to support these predictions, here are the highlights from the company’s third-quarter earnings report released in November:
GH raked in $60.8 million in revenue, indicating a 181% jump from the value recorded in 2018. (Roughly $5.5 million of this revenue was from the sample GH processed last year. No reimbursements were granted to payers for those samples, and GH succeeded in its appeal. The said revenue was added to the 2019 third-quarter report.)
GH increased its full-year revenue prediction from $180 million to $190 million to reach $207 million instead, showing an increase of over 125% year-over-year.
GH performed 13,259 tests with clinical customers, indicating an 89% jump from the number recorded during the same period in 2018 when the company only had 7,027 tests.
Meanwhile, GH’s biopharmaceutical clients performed 5,280 tests. This shows a whopping 111% increase year-over-year as well.
Apart from increasing the number of tests performed, the average revenue for every biopharmaceutical test actually jumped by 16% to be priced at $4,052. This is a result of more OMNI tests performed, which is priced higher than the Guardant360 tests previously favored by the clients.
GH has finally hit its stride this year. Its gross margins have improved to 70% compared to the 54% it recorded in 2018. The company also managed to lower its operating losses. A year ago, GH’s third-quarter operating loss amounted to $24.2 million. In the same period in 2019, the company decreased it to $17.5 million, indicating a 28% improvement.
To date, Guardant Health has reported an estimated annual revenue of $170.8 million. Its main competitors are Biocept, Epic Sciences, and Pathway Genomics.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
December 18, 2019
Fiat Lux
Featured Trade:
(FRIDAY, FEBRUARY 7 PERTH, AUSTRALIA STRATEGY LUNCHEON)
(HOW THE MAD HEDGE MARKET TIMING ALGORITHM TRIPLED MY PERFORMANCE)
“There are no winners in trade wars. It’s just a question of who loses the most,” said former Fed governor Alan Greenspan.
