Friday File: Annual Review completed, Plus a New Special Situation

The Big List, updated, plus an add-on buy and one new investment in the Real Money Portfolio

By Travis Johnson, Stock Gumshoe, February 8, 2019

Heydy ho, investing friends! I finally wrap up my Annual Review this week by covering the final three names… and I’ve also got a bunch of other updates to share with you, along with one add-on buy and one brand-new holding for the Real Money Portfolio… enjoy!

We’ll start with the completion of the annual review as I check in on Premier (PINC), Disney (DIS) and Equinox Gold (EQX.V, EQXFF), then updates on a handful of other stocks and that new addition (the suspense is building!)… finally, I’ll end with the big ol’ master list that summarizes my opinion of all of my Real Money Portfolio stocks.

Premier (PINC) buy below $40 for a below-market PE of 14 on a company that has substantial long-term growth and a uniquely valuable customer network (for group buying, health care data analytics, and consulting work), but low current-year growth. Will require patience, and may see low-$30s buying opportunities this year as next couple quarters are unlikely to excite.

Premier (PINC) has its roots as a purchasing coop for hospitals, and is still largely owned by its member hospitals, but it has also been quickly growing its focus on improving health care — using analytics and its large database of actual health outcomes from its member hospital systems to help improve efficiency for hospital systems and outcomes for patients. They offer a variety of services to their customers, from supply chain optimization and pharmacy group buying to consulting and other “outcome improvement” research. They even started a new subsidiary recently called ProvideGx which has the goal of stabilizing production and availability of important but relatively unprofitable (for big pharma) off-patent drugs, which is essentially a way to prevent trolls from rushing into those inefficient markets (like Martin Shkreli, for example) and jacking up prices for niche off-patent drugs that hospitals really need but aren’t big enough to get the bulk-production attention from major generic drugmakers (and for them, it’s a way of encouraging hospitals to join their network for easier access to “shortage” generic drugs). Premier’s ability to centralize several billion dollars in annual pharmacy spending from their member hospitals gives them the leverage to make things work… and make things better for their members, which encourages those members to deepen the relationship with consulting and other more profitable services.

The fear for Premier is that “group buying” is a hard ...

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