Goldman’s Obama Bet
If Democrats pull ahead in the race for the White House the team at Goldman has a trade for you.
According to a just released report, Goldman thinks hospital stocks could rally ahead of the election.
“With hospitals trading at a modest discount to historical medians we believe the hospital stocks could rally if the prospects for health reform and expanded coverage are seen as increasing,” writes the investment bank.
"The run-up to former President Clinton’s proposed health reform initiative saw hospital stocks outperform the market by 35% from 1993-94 supporting our view.”
Here’s their thesis. A growing number of Americans are uninsured; 116 million by Goldman’s tally. People without insurance tend to forego needed check-ups and procedures because of cost. That creates pent up demand.
There’s a greater chance the government will expand insurance coverage if Barrack Obama wins the election over John McCain. As a result, if the Democrats take the day in November it should be bullish for hospital stocks.
Community Health and Well Point both traded on Wednesday as if the market agrees with this thesis, reveals Joe Terranova. It’s an interesting concept.
I don’t buy it, counters Jon Najarian. LifePoint is already at a 52-week high. If you want it you can have it.
Tenet Healthcare is my play, adds Quint Tatro, with a stop below $5.25.
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Trader disclosure: On Aug 27, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Jon Najarian Owns (C), (JPM); Jon Najarian Owns (AAPL) And (AAPL) Calls; Jon Najarian Owns (ALF) Calls, (NTAP) Calls, (RMBS) Calls, (EWH) Calls, (UNG) Calls; Tatro Owns (C); Quint Tatro Is The Principal Of Tatro Capital; Tatro Capital Owns (FXI), (SHLD), (XHB), (XLF), (SMN); Tatro Capital Is Short (MON), (MOS), (POT), (RIMM); Terranova Owns (POT), (NOV), (SA), (GS), (KOL), (EOG), (VLO), (FCX), (RIMM), (AAPL), (X); Terranova Owns (AIG) Puts; Terranova Owns Dec. 2008 RBOB Gasoline Crack Futures
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV);
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)