Wednesday, December 3, 2014

Obamacare is a cash cow for insurers! Long Anthem.

Anthem has first mover advantage in selling health insurance through Obamacare exchanges. In their recent earnings announcement they topped earnings expectations, raised guidance on earnings, suggested a dividend increase, mentioned that health insurance plan prices will increase at 6% rate for the foreseeable future, and also said the market was overestimating the costs of the new health plan members enrolling through the Obamacare exchanges. Every one of those data points provided by the company is a positive sign for future earnings. Moreover, it is expected that many enrollees in Obamacare plans will reenroll with the same plan into next year, further supporting earnings growth that Anthem has seen over the past year. The author of this newsletter is long ANTM JAN 2016 $130 Calls / short ANTM JAN 2016 $135 Calls at a net price of $2.45.