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Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.
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The Google of Healthcare
Innovative, Integrated & Big
- U.S. healthcare expenditures of $10k per person annually equate to 18% of the nation’s GDP
- Providers are pivoting from fee-for-service models to value-based care which incentives long-term health
- This evolving paradigm depends on IOT driven data collection and A.I. inspired diagnostics
What an education! Last week I joined 47,000 attendees as host of the 55th annual HIMSS Healthcare IT conference in Las Vegas. For me it was like trying to take a sip from a firehose. Google Chairman Eric Schmidt, AMA CEO James Madara, GE Healthcare Venture Head Lisa Suennen and so many others discussing how to harness the staggering amount of data made possible by the Internet of Things (IoT). Their goal is to improve patient care and lower treatment costs, though a conversation on Day Three made me realize this is a lot harder than it sounds. Amanda is a strong and eloquent woman now in the 35th year of her journey through the healthcare system as an acute sufferer of lupus and rheumatoid arthritis. She described how she often spends more time each week coordinating appointments and file transfers among half a dozen specialists than on actually getting healthy. Undeterred, she has become a patient advocate who wants passionately to streamline the system. In the process I think she has defined the Holy Grail of Healthcare IT… Create a secure, frictionless network of patient records to speed care and lower costs. Sleuthing around the showroom floor I did find a promising blockchain company called Akiri, which is laser-focused on exactly this goal but it is privately held. No matter. The world’s largest fully-integrated healthcare system is publicly traded, gets rave reviews from attendees and is effectively doing the same thing. It’s my proxy for Akiri, thanks to Amanda..
March 10, 2018Read More
Rocks & Water
Infrastructure at a Discount
- California’s $50B Highway Appropriations Law triples CA infrastructure spending over the next decade
- Federal infrastructure allocations of $20B through 2019 likely announced in the March 23 spending bill
- One newly formed national leader in water and highway infrastructure declines 20% during market selloff
I love construction. As a kid I jumped fences into hardhat areas. As an adult I’ve built two houses and a barn. In my twenties, while stuck on an Amtrak Metroliner in a Philadelphia freight yard I even decided to accept a job trading oil over currencies because the industrial equipment outside my window seemed so much cooler. Currently I’m focused on one of the nation’s largest highway construction companies, which has just announced a $565 million acquisition of the country’s #1 hydro projects manager. The transaction is immediately accretive and creates a new dominant national infrastructure player, conveniently as state and federal agencies appear poised to initiate multiyear infrastructure programs. That’s a big positive, and I’m particularly excited to buy shares at a 20% discount to all-time highs following recent market related selling. The prospect of higher rates has taken a heavy toll on companies whose projects require public financing, but with a valuation of nine times 2020 estimates, this stock is too cheap to ignore… in a business I love.
March 10, 2018Read More
Up in Smoke
Timely Options Trade
- February’s stock swoon has created significant dislocations which persist even into March
- Volatility still well above pre-selloff levels creates opportunity to sell options at elevated premiums
- FDA plans to lower nicotine content has created additional pressure on tobacco but shares are resilient
Cigarette smoking is not pretty, although I do like cigars very much… especially on Sunday afternoons as I contemplate the week ahead. Tobacco has its place on Wall Street as well, specifically as a shelter for capital during times of extended market stress. Earnings are consistent, dividends are high and the average beta is just 0.55, meaning shares tend to fluctuate only half as much as the broader market. During February however, everything fell in unison. Part of the unusual selling in the sector may reflect intentions by the FDA to lower nicotine content in cigarettes by 2021/22. While these potential changes are noteworthy indeed, they are a long way off and at current valuations I’m a buyer. Additionally, imminent dividend distributions and uncommonly high option premiums are setting up one trade in particular. We have only a few days to put this position in place, and I’m not going to get caught sitting on the bench. This is a very timely trade.
March 10, 2018Read More
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