2012 was a very good year for the Covestor Healthcare model that I manage. I attribute the strong performance to the healthcare sector, which turned out to be a good area for the average investor.
With the Affordable Care Act (“Obamacare”) continuing to roll out into 2013, I believe that the added patient volume that should come along with the expanded coverage will bring opportunity as well as stress to the healthcare community.
Companies that help reduce costs and improve efficiencies for healthcare delivery should benefit. These companies include stocks involved in providing less expensive drugs whether by utilizing generics including drugs produced by Mylan (MYL), a significant holding in the model, or by cost-effective delivery by a company like Express Scripts (ESRX) a stock that I have owned in the past but do not currently hold.
The future remains bright for biotech companies that are producing real products treating real diseases. These include Healthcare Model holdings Amgen (AMGN), Celgene (CELG), and Regeneron (REGN).
The added patient volume associated with healthcare reform will contribute to revenue growth at established large pharmaceutical and healthcare supply companies like Johnson & Johnson (JNJ), Novo Nordisk (NVO) and Baxter (BAX), all three are holdings of the Healthcare Model.
One area that I have included in the Model involves healthcare for animals with MWI Veterinary (MWIV). This company delivers supplies to Veterinarians and is growing quickly and should have potential to continue to grow into 2013.
In my opinion, this sector will continue to be strong into 2013. I will continue to ‘ride herd’ over this group of stocks and be quick to exit any holding with any fundamental negative announcement or actual technical price weakness that might suggest price decline into the future. However, I shall work to be patient with those holdings that are doing well and continue to look for new possibilities and ideas for inclusion into the New Year.
Certain information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. The manager believes that such statements, information and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
