March 4, 2020
Likely winners in the U.S.: Healthcare (related to the healthcare crisis — hospitals, pharmaceuticals). Perhaps manufacturing, as an effort to bring the supply chain back home. And infrastructure stocks.
Today Congress agreed to an $8.3 billion emergency package to ramp up the fight to contain, treat and ultimately find a vaccine for the coronavirus. Importantly, hospitals will get government funding for those coronavirus patients that can’t pay.
With this funding (and more to inevitably to come) going toward healthcare, let’s take a look at the portfolio of one of the best healthcare investors on Wall Street.
Billionaire Larry Robbins has 40% of his $12 billion hedge fund in healthcare, which includes 8 of his top 11 positions. Here what his portfolio looks like …
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Big institutional money (pension funds, hedge funds, endowments, etc.) tends to follow the government money and legislation. It worked for Robbins post-Obamacare. He’s been patiently waiting and reforming these names, and may be in for another big run. These all did very well today. Of course, it helps that Biden has overtaken Sanders (a toxic candidate for healthcare stocks).
For the economy, something much, much bigger will likely be coming in a government spending package. Mnuchin today said they are looking at “all tools.” To keep the consumer moving, expect expanded unemployment insurance, maybe direct aid (like a FEMA-like payment). Banks might be incented/directed to keep liquidity flowing to companies disrupted by the virus (short term loans, loan forbearance, etc.). Remember, Trump’s economic agenda has always included a plan for a big infrastructure spend — modernizing and expanding the country’s infrastructure. This will be his opportunity, as Obama had with the American Recovery and Reinvestment Act in 2009, to allocate funding to his longer-term growth vision. That would bode well for engineering companies, heavy equipment/ machinery makers, metals producers, natural resource stocks and maybe some left for dead industrial conglomerates (GE?). Overall, global policymakers seem to be waiting to see more of virus impact unfold, with an eye on acting at the right time (with fiscal stimulus). As a European official said today, in this situation you can’t act too early, and you act can’t too late.”
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