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Another $$$MR. MARKET$$$ winner!! Today I sold HS at 42.35. That’s a 15% gain over my purchase price of 36.67 back on March 19th. That’s a 15% gain in only 6 weeks. That’s a 135% annualized gain. That makes 31 consecutive profitable trades of 15% or better. Did you do that? You? YOU?? YOU??
Over the same period the S&P 500 was up only 6.8%. So $$$MR. MARKET$$$ was twice as good as the S&P 500 and he did it with a stock whose PE was only 12. Less risk…greater return. Wow!
How does he do it? This can’t be legal. Making so much money in the stock market on free stock picks??? Come on..what’s the catch?
It’s simple..just reply back that and let me know what you think of my site. If I get 20 replies, you’ll get another pick. If you have never responded before, this is a perfect time to do so.
I am HUGE!!
$$$MR. MARKET$$$
================================================== =============
03-19-2011, 07:24 PM
mrmarket
Administrator Join Date: Sep 2003
Posts: 3,873
HS ==> The Big East Winner
--------------------------------------------------------------------------------
How wonderful it was to go outside today and enjoy the beautiful weather that comes with a brand new spring. This morning I went downtown and visited Starbucks, sat on the sidewalk bench and enjoyed just being. What is it about spring?
Then I went home, turned on the TV and started watching NCAA March madness. Boy do those guys have SPRINGS!
All of this thinking about spring and springs got me to thinking that there has to be a $$$MR. MARKET$$$ winner buried in there somewhere….and voila…I must have been psychic…because just yesterday, I bought Healthspring, Inc (HS). Forgive me for the day old report, but I knew I was going to be on an airplane for 4 hours today and I had to kill some time.
Yesterday I bought HS at 36.67. I will sell it in 4 – 6 weeks at 42.26. Here’s why I like HS:
First of all, you have to look at this ridiculous chart. Like every other $$$MR. MARKET$$$ stock, this company is an earnings MACHINE and its stock price just wants to go up and up and up and up!
What is especially sexy about this stock is that you are getting a stock that has gone up 164% off of its low in the past 52 weeks yet its PE is only 10.9. That’s right boys and girls – it’s a growth stock at value stock prices. It’s average earnings growth over the past few years is over 40%. Wow…Who doesn’t like a bargain???
HealthSpring, Inc., through its subsidiaries, operates as a managed care organization in the United States. It focuses primarily on Medicare, the federal government sponsored health insurance program for the U. S. citizens aged 65 and older, qualifying disabled persons, and persons suffering from end stage renal disease in the states of Alabama, Florida, Illinois, Mississippi, Tennessee, and Texas. The company also provides management services to healthcare plans and physician partnerships. In addition, HealthSpring’s services include negotiation, monitoring, and quality assurance of contracts with third party healthcare providers; medical management, credentialing, marketing, and product promotion; support services and administration; financial services; and claims processing, and other general business office services. Further, it offers Medicare Part D prescription drug plans to persons who are eligible for Medicare.
Now then, here is your lesson on Medicare:
Created in 1965, Medicare is a health insurance program for people age 65 or older, people under the age of 65 with certain disabilities, and people with end-stage renal disease. Medicare contains three programs: hospital insurance (Part A), supplementary medical insurance (Part B), and a prescription drug plan (Part D). All U.S. citizens eligible for Medicare are automatically enrolled in Part A when they turn 65. Although Part A beneficiaries pay no monthly premiums, they are responsible for significant deductibles and co-payments. Part B encompasses outpatient hospital care, physician services, laboratory services, durable medical equipment, and other preventive tests and services. Enrollment in Part B is voluntary and beneficiaries pay a monthly premium. Part B usually reimburses 80% of the cost of services while the beneficiary pays the remainder after meeting a certain deductible. Originally, Medicare was under a fee-for-service payment system. An individual could choose any health care provider certified by Medicare, and the Centers for Medicare and Medicaid Services (CMS) would reimburse the health care provider. As an alternative, Medicare allowed managed care organizations ( MCOs) to establish contracts with CMS to provide health services to Medicare beneficiaries. In turn, CMS would reimburse the MCOs. In 1997, Congress created Part C, initially known as Medicare+Choice and now known as Medicare Advantage (MA). MA plans establish contracts with CMS to provide health services to beneficiaries in exchange for premium payment per member per month (PMPM). In December 2003, Congress passed the Medicare Modernization Act (MMA), which increased the reimbursement amounts given to MA plans and expanded health care options. One such option is the Medicare Part D prescription drug plan, which began in January 2006. All Medicare beneficiaries may choose a prescription drug plan through Part D.
Unless you hate watching cable news, you should be aware of the fact that Obamacare went into effect about a year ago last March. The Republicans want to repeal it, but they won’t be able to. While there are a bazillion things wrong with our health care system, one of the peripheral beneficiaries of this monstrosity is the health insurance industry. Their profits have seen double digit growth, even in a struggling economy.
This ain’t no mom and pop shop. It’s a 3 billion dollar company whose sales were only 2 billion a couple of years ago. If you are a fan of PEG ratio, then you’ll have to build a monument for HS…as its PEG ratio is only 0.20. A bargain among bargains.
Part of the reason that HS is so cheap is that the entire Health Care sector in the stock market had a pretty ugly 2010, mostly because no one really knew what the heck was going to come out of Obamacare. The picture is starting to come into focus and while it’s hard to explain why, it’s not as difficult to see that HS revenues have been quite robust and the stock priced has kicked in. They have been crushing ANAL-ysts forecasts, that’s for sure. The revenue has been coming from increases in premium prices combined with more members paying these premiums. That’s quite a killer combo.
Insurance companies make money from premiums of course, but they make more money if they don’t have to pay out medical expenses. What Healthspring does is incentivize physicians to focus on preventive care that keeps patients healthy. If patients are healthy, they don’t file claims and Healthspring pockets the premiums. You can compile this philosophy with the trend that the Centers for Medicare and Medicaid Services are helping plans offered by Healthspring with increases in the rates they can prescribe. Believe it or not, Baby Boomers will be turning 65 over the next few years, which means more people will be receiving Medicare benefits – which means more members for Healthspring. In fact, 16 million Americans will turn 65 between now and 2015. That’s 40% more than those in the Medicare Advantage today. That’s rocket fuel for earnings growth.
The tale of the tape says it all:
Net income in the 2010 fourth quarter of $50.9 million, or $0.88 per diluted share, compared with $38.8 million, or $0.68 per diluted share, in the 2009 fourth quarter, an increase of 29.4% on a per diluted share basis.
Full year earnings per diluted share of $3.39, compared with $2.41 for 2009, an increase of 40.7%. Premium revenue in the 2010 fourth quarter of $868.2 million, up 30.8% over the 2009 fourth quarter. Premium revenue for the year of $3.1 billion, an increase of 17.8% over 2009. Medicare Advantage membership of 304,604 and stand-alone PDP membership of 724,394 at December 31, 2010, an increase of 61.0% and 131.4%, respectively, over the 2009 year end. That’s over a million members.
On November 30, 2010, the Company completed its acquisition of all of the outstanding capital stock of Bravo Health for approximately $545.0 million in cash. Bravo Health is an operator of Medicare Advantage coordinated care plans in Pennsylvania, the Mid-Atlantic region, and Texas, and a Medicare Part D stand-alone prescription drug plan in 43 states and the District of Columbia. As of November 30, 2010, Bravo Health had Medicare Advantage membership of 105,455 and PDP membership of 300,969. Basically, Healthspring bought over 400,000 members using some pretty cheap debt..effectively borrowing earnings on the cheap. Don’t think that this is going to stop either. The name of the game is getting members, and based on their track record, you gotta believe that HS knows how to do this. Don’t worry about the debt, they have almost 16 times earnings coverage. There are lots more acquisitions to fund, if they want to.
What does this mean going forward?
The company forecast for 2011 per-share earnings is $3.60 to $3.90, up from $3.39 a year ago. ANAL-ysts estimate that 2011 earnings will rise 12% over 2010 to $3.81. In 2010, by contrast, per-share profit jumped 41%.
Now it’s difficult to do a quantitative assessment of the earnings accretion due to the recent Bravo acquisition. But one thing is almost certainly factual. Healthspring will continue to benefit over the long term from the aging population and geographic expansion. Its think its coordinated care-only plans, physician engagement policy and health clinics help it tightly control medical costs. As they rope in more members, this business model gets applied across the board to leverage their revenue machine.
You have a mammoth company with a Return on Equity of about 19% with a PE of 10.9. You don’t even need to project earnings to know you are getting a good, safe deal here.
On 02/18/11, the company announced quarterly earnings of 0.89 per share, a positive surprise of 15.1% above the consensus 0.77. Over the past 4 quarters, the company has reported 4 positive (>2%), 0 negative(<-2%), and 0 in-line (within 2%) surprises. The average surprise for this time period has been 32.4%.
Based on this info alone, I would bet my next roll of the dice on the fact that HS will beat the ANAL-ysts $3.81 by at least 15%. So lets give HS some 2011 earnings of $4.38 per share. If you take these earnings and multiply it by the existing PE of 10.9. you get a share price of $47.74, which is well past my sell target.
Commenting on the 2010 results, Herb Fritch, Chairman and Chief Executive Officer, said, “We are pleased with our financial performance in 2010, including one month of contribution from Bravo Health. The improved utilization trends we experienced earlier in the year continued through the fourth quarter, and Part D operations also finished the year strong. For the 2011 membership enrollment period, we experienced substantial Medicare Advantage membership growth, despite the reduced sales and marketing period. In addition, our stand-alone PDP saw significant auto-assigned membership growth in January. Although our 2011 guidance contemplates a return to a more normalized healthcare trend in most of our products, we look forward to 2011 being another solid year for HealthSpring.”
Hey, Herbie can be riding in the Love Bug for all I care. They might even find him in Burger King. $$$MR. MARKET$$$ is going to get old someday, but I am continue to go to the weightroom and bench over 300 lbs until I get so old I fart dust. Yea, maybe I will use Medicare someday but one thing you can be sure of is I will be picking stock winners and sharing them with you cuz that’s how I roll.
I am HUGE!!
www.mrmarketishuge.com
__________________
Over the same period the S&P 500 was up only 6.8%. So $$$MR. MARKET$$$ was twice as good as the S&P 500 and he did it with a stock whose PE was only 12. Less risk…greater return. Wow!
How does he do it? This can’t be legal. Making so much money in the stock market on free stock picks??? Come on..what’s the catch?
It’s simple..just reply back that and let me know what you think of my site. If I get 20 replies, you’ll get another pick. If you have never responded before, this is a perfect time to do so.
I am HUGE!!
$$$MR. MARKET$$$
================================================== =============
03-19-2011, 07:24 PM
mrmarket
Administrator Join Date: Sep 2003
Posts: 3,873
HS ==> The Big East Winner
--------------------------------------------------------------------------------
How wonderful it was to go outside today and enjoy the beautiful weather that comes with a brand new spring. This morning I went downtown and visited Starbucks, sat on the sidewalk bench and enjoyed just being. What is it about spring?
Then I went home, turned on the TV and started watching NCAA March madness. Boy do those guys have SPRINGS!
All of this thinking about spring and springs got me to thinking that there has to be a $$$MR. MARKET$$$ winner buried in there somewhere….and voila…I must have been psychic…because just yesterday, I bought Healthspring, Inc (HS). Forgive me for the day old report, but I knew I was going to be on an airplane for 4 hours today and I had to kill some time.
Yesterday I bought HS at 36.67. I will sell it in 4 – 6 weeks at 42.26. Here’s why I like HS:
First of all, you have to look at this ridiculous chart. Like every other $$$MR. MARKET$$$ stock, this company is an earnings MACHINE and its stock price just wants to go up and up and up and up!
What is especially sexy about this stock is that you are getting a stock that has gone up 164% off of its low in the past 52 weeks yet its PE is only 10.9. That’s right boys and girls – it’s a growth stock at value stock prices. It’s average earnings growth over the past few years is over 40%. Wow…Who doesn’t like a bargain???
HealthSpring, Inc., through its subsidiaries, operates as a managed care organization in the United States. It focuses primarily on Medicare, the federal government sponsored health insurance program for the U. S. citizens aged 65 and older, qualifying disabled persons, and persons suffering from end stage renal disease in the states of Alabama, Florida, Illinois, Mississippi, Tennessee, and Texas. The company also provides management services to healthcare plans and physician partnerships. In addition, HealthSpring’s services include negotiation, monitoring, and quality assurance of contracts with third party healthcare providers; medical management, credentialing, marketing, and product promotion; support services and administration; financial services; and claims processing, and other general business office services. Further, it offers Medicare Part D prescription drug plans to persons who are eligible for Medicare.
Now then, here is your lesson on Medicare:
Created in 1965, Medicare is a health insurance program for people age 65 or older, people under the age of 65 with certain disabilities, and people with end-stage renal disease. Medicare contains three programs: hospital insurance (Part A), supplementary medical insurance (Part B), and a prescription drug plan (Part D). All U.S. citizens eligible for Medicare are automatically enrolled in Part A when they turn 65. Although Part A beneficiaries pay no monthly premiums, they are responsible for significant deductibles and co-payments. Part B encompasses outpatient hospital care, physician services, laboratory services, durable medical equipment, and other preventive tests and services. Enrollment in Part B is voluntary and beneficiaries pay a monthly premium. Part B usually reimburses 80% of the cost of services while the beneficiary pays the remainder after meeting a certain deductible. Originally, Medicare was under a fee-for-service payment system. An individual could choose any health care provider certified by Medicare, and the Centers for Medicare and Medicaid Services (CMS) would reimburse the health care provider. As an alternative, Medicare allowed managed care organizations ( MCOs) to establish contracts with CMS to provide health services to Medicare beneficiaries. In turn, CMS would reimburse the MCOs. In 1997, Congress created Part C, initially known as Medicare+Choice and now known as Medicare Advantage (MA). MA plans establish contracts with CMS to provide health services to beneficiaries in exchange for premium payment per member per month (PMPM). In December 2003, Congress passed the Medicare Modernization Act (MMA), which increased the reimbursement amounts given to MA plans and expanded health care options. One such option is the Medicare Part D prescription drug plan, which began in January 2006. All Medicare beneficiaries may choose a prescription drug plan through Part D.
Unless you hate watching cable news, you should be aware of the fact that Obamacare went into effect about a year ago last March. The Republicans want to repeal it, but they won’t be able to. While there are a bazillion things wrong with our health care system, one of the peripheral beneficiaries of this monstrosity is the health insurance industry. Their profits have seen double digit growth, even in a struggling economy.
This ain’t no mom and pop shop. It’s a 3 billion dollar company whose sales were only 2 billion a couple of years ago. If you are a fan of PEG ratio, then you’ll have to build a monument for HS…as its PEG ratio is only 0.20. A bargain among bargains.
Part of the reason that HS is so cheap is that the entire Health Care sector in the stock market had a pretty ugly 2010, mostly because no one really knew what the heck was going to come out of Obamacare. The picture is starting to come into focus and while it’s hard to explain why, it’s not as difficult to see that HS revenues have been quite robust and the stock priced has kicked in. They have been crushing ANAL-ysts forecasts, that’s for sure. The revenue has been coming from increases in premium prices combined with more members paying these premiums. That’s quite a killer combo.
Insurance companies make money from premiums of course, but they make more money if they don’t have to pay out medical expenses. What Healthspring does is incentivize physicians to focus on preventive care that keeps patients healthy. If patients are healthy, they don’t file claims and Healthspring pockets the premiums. You can compile this philosophy with the trend that the Centers for Medicare and Medicaid Services are helping plans offered by Healthspring with increases in the rates they can prescribe. Believe it or not, Baby Boomers will be turning 65 over the next few years, which means more people will be receiving Medicare benefits – which means more members for Healthspring. In fact, 16 million Americans will turn 65 between now and 2015. That’s 40% more than those in the Medicare Advantage today. That’s rocket fuel for earnings growth.
The tale of the tape says it all:
Net income in the 2010 fourth quarter of $50.9 million, or $0.88 per diluted share, compared with $38.8 million, or $0.68 per diluted share, in the 2009 fourth quarter, an increase of 29.4% on a per diluted share basis.
Full year earnings per diluted share of $3.39, compared with $2.41 for 2009, an increase of 40.7%. Premium revenue in the 2010 fourth quarter of $868.2 million, up 30.8% over the 2009 fourth quarter. Premium revenue for the year of $3.1 billion, an increase of 17.8% over 2009. Medicare Advantage membership of 304,604 and stand-alone PDP membership of 724,394 at December 31, 2010, an increase of 61.0% and 131.4%, respectively, over the 2009 year end. That’s over a million members.
On November 30, 2010, the Company completed its acquisition of all of the outstanding capital stock of Bravo Health for approximately $545.0 million in cash. Bravo Health is an operator of Medicare Advantage coordinated care plans in Pennsylvania, the Mid-Atlantic region, and Texas, and a Medicare Part D stand-alone prescription drug plan in 43 states and the District of Columbia. As of November 30, 2010, Bravo Health had Medicare Advantage membership of 105,455 and PDP membership of 300,969. Basically, Healthspring bought over 400,000 members using some pretty cheap debt..effectively borrowing earnings on the cheap. Don’t think that this is going to stop either. The name of the game is getting members, and based on their track record, you gotta believe that HS knows how to do this. Don’t worry about the debt, they have almost 16 times earnings coverage. There are lots more acquisitions to fund, if they want to.
What does this mean going forward?
The company forecast for 2011 per-share earnings is $3.60 to $3.90, up from $3.39 a year ago. ANAL-ysts estimate that 2011 earnings will rise 12% over 2010 to $3.81. In 2010, by contrast, per-share profit jumped 41%.
Now it’s difficult to do a quantitative assessment of the earnings accretion due to the recent Bravo acquisition. But one thing is almost certainly factual. Healthspring will continue to benefit over the long term from the aging population and geographic expansion. Its think its coordinated care-only plans, physician engagement policy and health clinics help it tightly control medical costs. As they rope in more members, this business model gets applied across the board to leverage their revenue machine.
You have a mammoth company with a Return on Equity of about 19% with a PE of 10.9. You don’t even need to project earnings to know you are getting a good, safe deal here.
On 02/18/11, the company announced quarterly earnings of 0.89 per share, a positive surprise of 15.1% above the consensus 0.77. Over the past 4 quarters, the company has reported 4 positive (>2%), 0 negative(<-2%), and 0 in-line (within 2%) surprises. The average surprise for this time period has been 32.4%.
Based on this info alone, I would bet my next roll of the dice on the fact that HS will beat the ANAL-ysts $3.81 by at least 15%. So lets give HS some 2011 earnings of $4.38 per share. If you take these earnings and multiply it by the existing PE of 10.9. you get a share price of $47.74, which is well past my sell target.
Commenting on the 2010 results, Herb Fritch, Chairman and Chief Executive Officer, said, “We are pleased with our financial performance in 2010, including one month of contribution from Bravo Health. The improved utilization trends we experienced earlier in the year continued through the fourth quarter, and Part D operations also finished the year strong. For the 2011 membership enrollment period, we experienced substantial Medicare Advantage membership growth, despite the reduced sales and marketing period. In addition, our stand-alone PDP saw significant auto-assigned membership growth in January. Although our 2011 guidance contemplates a return to a more normalized healthcare trend in most of our products, we look forward to 2011 being another solid year for HealthSpring.”
Hey, Herbie can be riding in the Love Bug for all I care. They might even find him in Burger King. $$$MR. MARKET$$$ is going to get old someday, but I am continue to go to the weightroom and bench over 300 lbs until I get so old I fart dust. Yea, maybe I will use Medicare someday but one thing you can be sure of is I will be picking stock winners and sharing them with you cuz that’s how I roll.
I am HUGE!!
www.mrmarketishuge.com
__________________
Nice job.
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