Michael DecterCatamaran CorpCCT.TOTOP PICKDec 20, 2013

(A Top Pick March 9/15. Up 31.7%.) (Now part of UnitedHealth.)

(A Top Pick March 9/15. Up 31.7%.) This was acquired.

(A Top Pick Jan 2/15. Up 30.5%.)

(A Top Pick Oct 21/14. Up 71.32%.) Unitedhealth (UNH-N) took this out for a nice healthy premium.

(A Top Pick Aug 13/14. Up 63.47%.) This company was acquired. Had thought the business was undervalued and that there was an opportunity to grow the business and the chance that they could be acquired.

United Health has made an offer for the stock. He waited a few weeks to see if another offer would come through. What bothered him about the deal is that this would be dead money until the deal closed. To have a name sitting there going sideways for the next 5-6 months would not have been very beneficial to the performance in his portfolio. United Health is a phenomenal company, and you couldn’t have asked for a better name to be taking this over. There might be something to look for, in how they treat it from a tax perspective. There is always some risk of an antitrust situation or some other regulatory situation. He doesn’t think the deal will fall apart.

It seems to be holding in alright. It is still very much intact. It probably needs re-stimulating in some way because the story is a bit stale now.

In this environment, he is looking for things that he thinks are not expensive and that have some growth potential. He likes the area they are in. This is basically moving healthcare and the distribution of pharmaceuticals more onto an online system like the Obama care. They throw off cash and use their cash to make acquisitions to fill in their product line. Trading at about 18-19 times forward earnings.

(A Top Pick Dec 20/13. Up 16.35%.) Started as a company that wired together 25 pharmacies for the Ontario government to improve drug dispensing. Since then, they have transformed themselves into a US PBM (Pharmaceutical Benefits Manager). Companies and governments running drug plans hire them to run their drug plans for them. They negotiate good prices and get better utilization. This company is very good at what they do.

A pharmacy benefits management company. Basically provides transparency for companies and communities that are looking to end up reducing drug costs. They cover 350 million prescriptions each year across 32 million members. Produces significant free cash flow. Earnings are expected to grow by 21%, and then accelerate to 34% in the coming 2 quarters. Stock appears to be breaking out of a 3 years sideways trading band.

A pretty volatile stock with some pretty big swings between low $40’s and high $50’s. Until we see it break out above $60, it wouldn’t interest him. If you are trying to leg into this in the shorter term, you could use some Volatility Stops.

An expensive business. It is usually a 31 times PE and is now historically cheap. The overall structure of the business is set up to produce more than $500 million of free cash flow. Hold it here.

(A Top Pick Dec 20/13. Up 6.8%.) There was a good deal of volatility in this, based a little bit on whether Obama care was going to create more business or turbulence in the US healthcare market. It is becoming clear now that Obama care has succeeded in its goal of additional enrolled people. Obama care has succeeded in expanding the covered population, but has not had much success in retaining costs, and this company is in the sweet spot for containing costs. Thinks coverage will continue to expand, which will drive more demand to contain drug prices, which will mean more business for this company.

This is just a good growth story in healthcare management. Basically going online to manage all your pharmacies and health care needs. Obama care is driving everything to these private and public exchanges these guys own. Have been kicking out excess cash flow which has been used to make acquisitions. You are getting all of this for about a 20 multiple.

Drug distribution to the home. A smaller player that has been very, very good at taking market share from the bigger guys. Have nice visible growth earnings over the next couple of years. In a fairly economically un-sensitive business. Thinks this is going to do quite well.