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


How are broker-dealers helping 401(k) advisers adapt to a changing market?

Bryan Hodgens, co-head of LPL Financial's Retirement Partners group, says the industry is getting much better at connecting advisers to wealth management opportunities and helping scale their businesses.

Latest news & opinion

Social Security funding outlook improves slightly

Retirement reserves extended one year; disability fund by 20 years

IBD report: Another impressive year

Despite a stock market decline, revenue is up. And the streak isn't expected to end anytime soon.

IBDs with the most CFPs

How many of the more than 83,000 certified financial planners are employed by the big independent broker-dealers?

Richard Thaler wants to use 401(k)s to boost Social Security payments

The Nobel laureate wants to simplify drawing down retirement assets, which he thinks is 'way harder' than saving the money.

InvestmentNews announces 2019 Innovation Awards winners

Sheryl Garrett is this year's InvestmentNews Icon.


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