Anthem Inc (ANTM)

A free cash flow machine. Have retired 58% of their outstanding shares in the last decade. The #2 managed care organization, health insurer, in the US. Dividend yield of 1.3%. (Analysts’ price target is $226.)

(A Top Pick Dec 5/16. Up 31%.) The 2^nd largest health insurer in the US, and has been a long term holding for him. Trading at only about 14X his earnings estimate for next year and trades at almost a 7%-8% free cash flow yield.

(Top Pick Feb 22/17, Up 17%) They are a pure play on health insurance in the US. They are a leader in 14 states on blue cross and blue shield. Technicians should grin at this chart.

(A Top Pick Sept 6/16. Up 53%.) The number 2 health insurer in the US. They are primarily in 13-14 states and tend to be the #1 provider. Has about a 2% dividend yield. Trading at only around 14X earnings.

A great story. The stock has done really well over the last 10 years. The 2^nd largest health insurer in the US. It helps to deal with some of the escalating health-care costs problems. Generates gobs and gobs of free cash flow. Trading at about 13X next year’s earnings. Dividend yield of 1.4%. (Analysts’ price target is $191.)

(A Top Pick Feb 22/17. Up 39.41%.) He really likes the managed care sector in the US. This is one of the largest Blue Cross-Blue Shield insurance companies. There are some potential rate tailwinds from a tax reform.

A US health insurance company. The whole area is in turmoil right now. They insure about 40 million Americans. Even with all of the turmoil, the whole idea from a logical standpoint is that both the Republicans and the Democrats have vowed that they want no one to be left behind, that they want insurance. Ultimately, if insurance is going to work, it has to be very broad. Dividend yield of 1.5%. (Analysts’ price target is $174.)

The dominant licensee of Blue Cross Blue Shield in 14 states. About 1 in 9 Americans have insurance through them. There are some very structural, positive tailwinds for the medical managed care organizations over the next couple of years. Dividend yield of 1.59%. (Analysts’ price target is $175.75.)

(A Top Pick Feb 2/16. Up 31.82%.) The #2 healthcare insurer in the US. Healthcare has been out of favour in the last year, but even with that this has made decent money. A testament to what a great quality business is. A fantastic cash generating business. Undervalued, trading at 12X 2018 earnings. Dividend increases every year, and they buy back stock.

A place in the insurance health care space you want to be in until things in that space work out. Blue Cross/Blue Shield.

Considers this as a commercial predominant HMO. Most of the lives on this are going to be sponsored by an employer. A fine business. Typically, over time they run on a medical loss ratio, so tend to run over time on the percentage of premiums that come in that are paid out as claims. As Republicans unveil what they want to do in order to replace Obama care, he thinks you will see some issues emerging that threaten some of the companies that take most of their premiums from employers, that is a long-term concern. In the meantime, this should do reasonably well.

This has been a long term holding for him, and has done really well owning it. He took some profits about 1.5 years ago during the merger mania, when this company announced its merger with Cigna, and since that time you can see the peak, and the stock has tailed off until just recently. The Obama administration were really pushing back against mergers, and there is a much better prospect that the mergers will go forward. The stock is really cheap trading at 12X earnings, and it should trade closer to a market multiple. Dividend yield of 1.8%. (Analysts’ price target is $155.88.)

(Top Pick Nov 4/15, Down 8.04%) It is down on the threat of a democratic election. This is the place you want to be in the health care space at this point. They are large and diversified, adaptable company in this space at attractive valuations of 11 times earnings.

The deal with Cigna has been an overhang on the stock. A $50 billion acquisition. Having the 2^nd and 4th largest players coming together is subject to review by government, and he expects the decision will come early next year. If successful, he thinks the stock will behave nicely and you get a good lift. Even if it is unsuccessful, you probably still get a lift because this uncertainty goes away, and investors will see that management is now getting back to business.

She owns United Healthcare (UNH-N) instead. She thinks this is an interesting buying opportunity here. We are seeing a lot of changes in this area and she is looking for a lot of changes in the next 12 months. If you own it, it is a hold, but you must think three years out.