Humana Inc (HUM)

Affected by upcoming US election concerns. Investors worried new government will limit profits on US drug companies. Generally speaking, better names for investors in healthcare sector. Does not own shares. 

The proposed merger with Cigna is a terrible idea. Humana was doing well, so why do they need Cigna? The FTC will resist this merger and the FTC will be right.

It's been a choppy year for US health insurers, limited by an uptick in elective surgeries. But this is temporary. Human remains dominant in this sector and the population is aging. Should continue to compound. Happy to hold onto this.

The markets has this wrong. They reported last week then shares tumbled more than 6% in a strong market week. He's taken profits on this but still owns many shares. Is beating the S&P since June. HUM actually reported a good quarter: strong earnings beat, 6% up YOY, sales up 18%. But shares came up way too high leading up to that report, so high expectations. Their benefits expense ratio came in lower than expected (good), but the core insurance segment ratio's was higher than expected. Also, their forecast suggests this ratio could go higher, due to a wave of Covid cases that hit sooner than they expected. Wall St. didn't like that HUM did not upgrade their full-year guidance. HUM projected slower, but more profitable growth. Run by good managers. Own for the long term.

Cheaper than UHN which he strongly likes, and shares the same fundamenentals.

Humana has gone from $420 to $500 in the past month. Healthcare stocks are climbing, but he prefers HC insurance than the drug companies, because their earnings are more predictable and trade a lot cheaper. 42% of Americans are obesity, so there's a lot of potential demand for these new, popular diet drugs. However, a lot of these people are also insured. Remember that the drugs space is competitive and eventually new drugs go generic. Insurance doesn't suffer that problem, and there isn't much variability in their earnings (they're more predictable). He also likes UNH.

He added on today's sell-off, which is an overreaction to HUM reiterating weak guidance. The company has a strong record of performance.

He just bought it. Profitable healthcare is a good place to be this year; it's very defensive

That news is distressing. That's unfair. He switched to Humana for coverage, but also bought Humana shares.

They serve 17 million benefits plan members, focusing on Medicare, the fastest-growing segment in US healthcare. Boasts 20% return on shareholder equity, growing earnings at 14% compounded over the past decade. This should continue, given demographics and inflation. Also, in a non-cyclical part of the market in coming quarters. Pullback allows a good entry point.