0:00 spk_0
Let’s talk about healthcare because it was sort of like a sleeper here, you know, this year it’s kind of middle in the pack in terms of performance and there’s a big dispersion across the different healthcare stocks. What do you sort of changed in November that that helped fuel some of these gains?
0:17 spk_1
Well, I think first and foremost, it’s just been the breath of the market and money coming out of some of, you know, these perennial winners, namely large cap tech. I think when, you know, I speak to healthcare investors, one of the biggest things that we, we kind of discuss in in so many different forums is just the momentum of tech and and the underperformance of healthcare that’s been so consistent.So for the first time all year you finally saw some of that dispersion happen um or or some reversion rather into health care. I’m not really sure that anything has changed significantly, but I think enough people are talking about the fact that the companies seem more comfortable with the regulatory environment more broadly.
1:05 spk_0
Um, and when you look at what has done well, uh, within the group, a lot of it is, um, drug makers themselves, a lot of it is device makers as well. Um, it’s not so much the insurers, for example, um, and do you think, is that fair to say and what kind of, what are the dynamics that have driven kind of the subsectors within healthcare?
1:28 spk_1
Yeah, I think when you look at the insurers and the managed care subsector.Two things really come to mind. One, there’s been sort of this on again off again situation with respect to the exchange subsidies and and whether that was going to be part of the agreement that got the government back up and running. So far there’s been no definitive answer on that, but it seems like there will be an extension. I mean, that’s what most of the reports suggest. But again, it’s been a little bit inconsistent as far as the news flow there. I think that’s been a little bit troubling for some investors to wrap their heads around. The second thing we’re just.that we’re seeing, you know, utilization stay stronger for longer, um, you know, that goes back to your comments around the medical device stocks. They’ve been fairly strong and if they’re strong, you shouldn’t really see managed care play um play to the same tune, meaning if one group is strong there, the other should not be as strong as these are the companies that that kind of pay for those procedures. So we’ve seen a lot of strength in pharma and medical devices because of the utilization situation.And then managed care has kind of lingered, um, you know, the stocks have not been bad necessarily, but they have not really caught this momentum trade.
2:41 spk_0
Do you think that will change for managedcare?
2:45 spk_1
I don’t really see anything changing dramatically with managed care into next year. I still think utilization is going to be pretty solid next year. I mean, the economic data um has been has been fairly strong. There’s been a lot of new products that have been launching across, um, you know, different categories.Within devices. Obviously the GLP ones, if they continue to um exceed expectations and now you’ve got the orals coming to market, some of the pricing dynamics I think help manage care, but on the flip side of volumes continue to expand like a lot of um.You know, people around the street expect them to. I’m just not sure this group catches a major bid, um, but they’re very cheap at the same time. So you you have this dichotomy between whether the group is kind of sound fundamentally and whether they’re cheap enough.