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COMMENT
Healthcare themes. Massive sector that we don't really see reflected in the TSX. Less than 1% of the TSX is healthcare, and about half of that are marijuana companies. So he really looks outside the Canadian market, mainly in the US but also globally. Pharma, biopharma, medical devices, managed care, and facilities. He's looking for companies with a 10B+ market cap outside of Canada. Companies connected to healthcare account for 13-15% of the global stock market. It's a vast industry.
Unknown
COMMENT
Covid and healthcare. PZE's anti-viral draws the line in the sand to make Covid endemic and put the pandemic behind us. Everyone feels the rotations happening: growth to value, momentum into cyclical, small cap to large. This rotation isn't new to January, it was going on before. We'll have growth this year, though it's decelerating. In times when the clouds are gathering, you want companies that have good visibility of operations, good valuation, proven track record. Politically and individually, handling of the pandemic has changed sentiment towards some companies. Healthcare is shaping up to look really good for the 2022 environment.
Unknown
HOLD
Large cap biotech. Its two franchises are dominant: macular degeneration and atopic dermatitis. One of the best at R&D. Proven ability to execute. One of the better growth profiles for next 3-5 years. Bit of volatility around reimbursement. Decent valuation. No dividend.
Pharma & Healthcare
DON'T BUY
Includes boring drugs, which provide consistent cashflows. Bit of growth in its biosimilar business, but talk of selling that. Range bound, limited growth, fair amount of debt, but tolerable for the type of assets. Low margin generics are more sensitive to inflationary risks. Dividend is probably safe.
Pharma & Healthcare
DON'T BUY
Political lightning rod of distributors, so he's on the sidelines. Windfalls from Covid vaccine distribution, but this will dissipate. Price, time, volume are subject to inflationary pressures.
wholesale distributors
BUY
His firm manages this. Contains 20 large cap healthcare companies, with a covered call strategy. Good for monthly cashflow. If you want more beta, there are other alternatives. Over the last year, large cap has absolutely dominated small caps, and he doesn't see this abating this year. Yield north of 8%.
E.T.F.'s
BUY
XLV vs. IBB Has done very well, and also well positioned for the type of market we're in right now. Cap weighted. A fine way to get pure beta in the sector. A better choice than IBB. IBB is much more concentrated with a higher risk in biotech. Smaller caps have lagged large caps since last year, to the tune of 50-60% relative performance, because of the impact of higher interest rates on growth, plus the FDA's become slower to approve new drugs.
E.T.F.'s