market folly

We're posting up notes from the Sohn New York Investment Conference.  Next up is Larry Robbins of Glenview Capital who talked about the healthcare industry and shared a myriad of ideas, including long HMOs and hospitals, short pharma index, and short 3M (MMM) and short Chemours (CC).


Larry Robbins's Sohn New York Presentation

Buy HMOs and hospitals. Short pharma index.  Hospitals trading at discount despite superior growth.  Buy Cigna (CI), Humana (HUM), UnitedHealth (UNH), HCA (HCA), Tenet Health (THC), UniversalHealth (UHS). 

•    Medicare For All is dead on arrival. Need President and Congress in order to get Medicare For All. Too high of a hurdle. Only 3 presidential candidates support this and they are not the favorites. Democrats in House and Senate not all on board. Need 60 senate votes to do this because it requires spending money.
•    Multiples are compressed relative to the market in HMO sector and have over 50% upside
•    President can act unilaterally to lower drug costs due to provisions of ACA. Drug revenues at risk
•    Same drug cost 3 times more in the US as in other OECD countries
•    Both sides (Dem and Republican) agree on drug prices
•    People under appreciate coming biosimilars

Short 3M (MMM) on PFAS (chemical that causes cancer that has ended up in drinking water) risk. Lawsuits have gone up 87 fold. Reserves for liabilities have only gone up 8%. They are not reserved. They have at least  $3 to $6 billion liabilities on this.

Short Chemours - is also exposed to these PFAS lawsuits.  Each time DowDuPont (DWDP) loses a lawsuit, he says you should assume this also hits CC.

Be sure to check out the rest of the Sohn New York conference presentations.