Portfolio Manager Perspectives

Jeff Benjamin

Aim's Tyler Dann: Why health care sector is rife with opportunity

Nov 3, 2009 @ 10:04 am

By Jeff Benjamin

With Congress advancing its controversial 1,900-page health care reform legislation, Wall Street has pushed health care sector stocks into value territory, according to Tyler Dann, co-manager of the $4.8 billion Aim Charter Fund CHTRX.

“We find opportunities in periods of controversy, and health care is the biggest area of controversy right now,” he said.

Health care stocks represent the largest overweighting in Mr. Dann's fund at 17%. Their weighting in the benchmark Russell 1000 Index is 13%.

Mr. Dunn argues that he's not just being contrarian and that there a strategic opportunity to seize on “growth/value anomalies.”

“There will continue to be opportunities in the health care sector as we come through the ashes and slouch toward a single-payer [health insurance] system,” he said. “Right now, many of those stocks are cheap because all but the worst-case scenario is priced in.”

Mr. Dann said that the market has oversold the sector out of fear that a public insurance option will be passed by Congress — which many think could eventually put private health insurance companies out of business.

“In my opinion, single-payer is the worst-case scenario for managed-care companies, but I don't think we'll reach that point for a long time, if ever, and our investment horizon is two or three years,” he said. “There is a valuation opportunity because of a generic fear over the prospect of any health care legislation.”

Mr. Dann summed up Wall Street's knee-jerk reaction to Congress' health care reform efforts as “legislation bad, sell stocks.”

“We think that attitude allows for a not-as-bad-as-you-think-it-is case scenario,” he said.

The flip side of the fears over a single-payer system is the idea that as more people are insured, the number of medical procedures performed should increase. This should create a volume opportunity for the health care industry, Mr. Dann said.

“We've been adding significantly to health care because we believe we're paid to buy fear and sell greed,” he added.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives .


What do you think?

View comments

Recommended for you

Featured video


Why a #MeToo story about the financial advice industry was important to do

Reporter Greg Iacurci and editorial director Fred Gabriel discuss the survey behind our cover story on sexual harassment in the workplace.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

10 millennials making their mark in Washington — and beyond

These next-generation leaders are raising their voices and gaining influence over financial advice regulation and legislation.

Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Former Merrill Lynch star broker Thomas Buck sentenced to 40 months in prison

He pleaded guilty to securities fraud in 2017; charged clients excessive commissions.

Rules for claiming Social Security at 70

Some individuals' benefits will begin automatically; others have to take action.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print