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Cramer has been behind Humana [HUM
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] since Mad Money debuted nearly three years ago and those who bought it when he first recommended it would have caught a double. Humana is “the best managed care company in the country,” he said, but between President Bush’s new budget and a new president less than a year away, the healthcare company stands at a precipice.
Speaking to Cramer by phone on Monday’s show, Humana CEO Michael McCallister declined to say which of the candidates he thinks would be best suited to manage the country’s healthcare challenges, but did say that, whoever it is, they will have a “significant problem” in contending with dramatically rising Medicare costs. McCallister said he hopes the next president will take advantage of the private sector to increase productivity as one way to fix the country’s healthcare system.
Regardless of who wins the election, Humana remains one of the biggest beneficiaries of the huge growth in the Medicare market, Cramer said. That growth has led to increased demand for capital among Humana’s subsidiaries, according to McCallister, which one of the reasons HUM has not done a buyback to shrink its float. But he expects that “high-quality problem” to dissipate over the course of the year, which would allow for a stock buyback “if that’s the right thing for the shareholders.”
Cramer said Humana’s 4% drop on Monday – purely profit-taking after the company reported a great quarter – represents the perfect buying opportunity for this best-in-show name.
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