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TMFHelical (98.70)

Buying Spree in the Helical Port

Recs

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August 13, 2011 – Comments (0) | RELATED TICKERS: AFAM , HCN , MR

I noted in my last blog post that the high cash level in my healthcare portfolio, along with the downturn in the market had me again buying companies.  With my disclosure window open, I could not name most of them directly at the time, but am now freed up.  The portfolio today is at $54,158.56, up year to date by 7.9% (I'll take that) and with a ~12% cash position.  

I bought the following:

8/4 UNH 50sh for $2,275.00

I was early as this is a bit lower now than my buy point.  The health insurance sector wasn't previously represented in the port, and is a key element in the healthcare industry.  I had missed the run up in this sector since some of the uncertainty due to healthcare reform was removed, expecting the companies to not really recover until into 2013.  I'm therefore content to get in with an industry stalwart on the pullback.  I have yet to look closely at smaller cap offerings in the space, but would like to build with a sense of safety in size for the time being.

8/8 was a very active day as the market experienced some heavy acid reflux (which doesn't seem over).  I bought:

MDT    100sh    $3310.80

JNJ       50sh    $3126.50

AFAM  100sh   $1835.20   May add here if this plays out.

HCN      50sh    $2204.50

NVS      50sh    $2814.45

MR       100sh   $2322.99 

PPDI     150sh   $3728.80  (added on 8/9).

Medtronic, Novartis and PPDI are all returns to the portfolio, each at prices better than I previosly let them go. JNJ was an addition to the existing holding at a price I could not resist. MEdtronic may be on the shortest leash, and I may let it go again if I get further unease in the market, see a really attractive opportunity, or get a nice gain in the near term.  I like Novartis long term, but it is on the blog to conserve cash in a downturn, as it was previosly.  PPDI is in the CRO spac which I like.  I may have waited for a better price if not for the rumors of acquisition and such around the company which has stated it is looking to provide a move that will deliver value to shareholders in the near term (dividend inc? another buyback?).  They are lower now than their recent buyback (which I didn't care for), so that has to be a possibility.  They are also attractive by virtue of having lots of cash to take advantage of a stressed market.

Mindray is new, and while I think it may be expensive here, I like the position they are carving as a supplier of lower cost medical instrumentation.  This position should serve both emerging and stressed established markets in the coming years. 

Healthcare REIT owns healthcare realestate.  I've followed this for year and it is a core in my IRA, but was not at a price point where I wanted to add it here.  The downturn may have given me that.  I would normally hold off adding at a yield below 7%, but with fed rates low for seemingly ever (at least a couple more years as they noted), it was worth a nibble near to 6.5%. 

Almost Family is a home health provider, as is former Helical holding Amedisys.  Listening to these two companies over the past few quarters has given me a better feeling of affinity for the management of AFAM, so they got the nod over adding back AMED.  This could be a value trap as the industry will face decreasing margins for some time, but the worst regulations and cuts just past, so a bump from here should be reasonable.  Bears close watching though.

When I cut the portfolio back near the end of June,  I sold a number of companies.  It is worth a consideration of what I did not buy back with the recent correction.  As noted, AMED was not returned to the port, out of a preference for AFAM.  I'd like all the others back at some time.  I may kick myself for not returning BioReference Labs (BRLI) as they have been performing well for some time, but I wanted to preserve some cash still.  Cardinal Health didn't drop quite far enough to get truly attractive to me, and I debate whether Cardinal or McKesson is my preference in this space (probably the latter).  Medco won't be back until the business sorts out, especially since they have M&A activity that may not pass federal muster.  And finally, I'd like Genomic Health again, but don't feel in a rush to add them as newer products may not get this growing at a high rate again for a couple of quarters.

Lets hope the market settles a bit for the remainder of the year, as  I'd really like to just hold for awhile.

TMFHelical

Home Coverage Fool 

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