Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : BAK - Investing -- Ignore unavailable to you. Want to Upgrade?

To: thatsnotluck who wrote (3055)	7/9/2012 9:48:32 AM
From: Spekulatius	Read Replies (1) \| Respond to of 3249

Re: WLP - anybody likes this health insurers.What got my attention is that they Looks like the health care law may led to more M&A in this sector. I am surprised by the strong earnings boost that WLP is estimating for 2015. I think the sector deserves some attention.

To: thatsnotluck who wrote (3055)	7/9/2012 11:57:35 PM
From: Spekulatius	Read Replies (1) \| Respond to of 3249

Re: WLP - anybody likes this health insurers.What got my attention is that they It is not typical that an acquirer goes up but so be it. My thesis is that WLP is cheap and generates FCF almost equal to net earnings. They funnel this back into share repurchases and recently started a dividend. 12.5%FCF yield after tax at an 8x PE is not bad. As for the health care mandate, the CEO of HUM has pretty much stated that 2014 is going to be a tough year. the reason is that the new rules make it more difficult to estimate the cost and adequate premiums. Lot's of moving pieces there. The health insurers don't have much risk to principle (Short cycle, duration only one year) and for diversified insurers cost trends should be very clear. The problem is that it's less clear if there are rule changes but in any cases, mistakes can be addressed after one year in the new enrollment season. The returns on tangible equity seem to be very high. WLP has a lot of goodwill from the mergers before 2005 that essentially created the Anthem/Blue gross network out of single state health insurers. I don't hold the goodwill against them at this point. I think HUM may be an acquisition target as well. AET also looks very very cheap but i don't think they are an acquisition target.