“Obamacare: Don’t get mad, get RICH!” (sez Money Map Press)

Sniffing out the Obamacare beneficiaries touted by Money Map Report's Keith Fitz-Gerald

By Travis Johnson, Stock Gumshoe, November 19, 2013

The latest screed from Danielle O’Dell for the Money Map Report is aimed at first getting you all fired up about Obamacare, in case you’re one of the seven people in the United States that doesn’t already have a strong opinion about that law’s impending enactment, and then, more importantly, at telling you that she’s got a way for you to profit from Obamacare instead of getting angry about it.

Why? Well, the obvious answer is: writing stuff about Obamacare gets people fired up.

And fired-up people read through long sales letters and are motivated to take action.

Actions like, say, subscribing to newsletters.

I’m sure every single person reading this has their own personal opinion about the troubles with our health care system, and about all possible proposed solutions, and the polls certainly tell us that everyone hates Obamacare even as most of us don’t quite understand how it’s going to end up working — since the rollout of the health care exchanges has been so botched “I hate Obamacare” is certainly an easy opinion to come by even if you generally like some sort of universal or single-payer health care system or a reorganization of the health insurance market, and even if you personally might be a beneficiary of the new system.

So I won’t dwell on Obamacare or on the political aspects of it, and I don’t really much care what Danielle’s opinion is on that or her “countdown to catastrophe” doomsday clock for the enactment of part of the Affordable Care Act on January 1 … we’ll just try to figure out what stock O’Dell is touting as a play on this big change to the health insurance markets.

And yes, in order to even get to the ideas of how to profit from Obamacare we need first to sit through an interminable sales pitch about the free “Beating Obamacare” book that they’ll give you for subscribing — but you could, of course, buy Beating Obamacare for $5 or $10 yourself if you wanted it — do you want to subscribe to the Money Map Report newsletter?

Well, let’s first see what stock or investment they’re promoting as their way to profit from Obamacare — this isn’t the first “Obamacare profits” pitch we’ve heard, and I suspect it won’t be the last, but we’d be delighted to figure out the specifics for you if we can.

The pitches about specific investment ideas come from Keith Fitz-Gerald, one of the analysts behind the Money Map Report and a few other Money Map newsletters, here’s a taste of his spiel after he takes over from Danielle in this ad “presentation”:

“OBAMACARE: DON’T GET MAD, GET RICH!

“Let me give you just one quick example of what you’ll find in this free special report…

“Everybody on Wall Street ASSUMES that Obamacare will hurt companies that depend on hourly-wage workers the most…

“Especially fast-food companies…

“Because fast-food companies are going to have a hard time giving health insurance to millions of employees who barely make minimum wage…

“It makes sense, right?

“But wait…

“The folks who run these giant fast-food chains aren’t stupid…

“If they simply take their 40-hour-per-week FULL-TIME employees…

“And turn them into 30-hour-per-week PART-TIME employees…

“They won’t have to pay a penny in health insurance!

“And all that savings will go right to the bottom line…

“In other words, Obamacare will FORCE these companies to become even more profitable than they are today…”

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So I guess McDonald’s is the “freebie” pick that he’s willing to share with anyone who sits through the ad pitch, and he goes into a bit more detail here:

“So invest in McDonald’s, because unlike many other American companies…

“McDonald’s will not only remain unscathed by Obamacare…

“Obamacare will actually FORCE McDonald’s to become more profitable than it is today!

“But at roughly $90+ a share, it’s not easy for the average investor to take a large position in McDonald’s…

“Nor is it the kind of stock that could double or triple in value over a short period of time…

“Because blue-chip stocks like McDonald’s don’t usually do that…”

I don’t know how much of an impact Obamacare might have on McDonald’s future, but I’d guess that the shares have “taken a breather” over the last six months probably at least as much because they had gotten kind of expensive and the company was generating only about 2% sales growth as because of any health insurance concerns.

And he throws out another (very) thinly veiled idea in fast food:

“HINT…

“In China nowadays, Colonel Sanders’ chicken is more popular than General Tso’s!”

I’m under the impression that General Tso’s Chicken is a “Chinese American” dish popularized entirely in Chinese restaurants in the US, though I’m sure you can now get it in Beijing … but yes, Kentucky Fried Chicken has been a big hit in China, and China was the source of much of their growth over the last decade — though, like McDonald’s, KFC parent Yum Brands (YUM) has had some trouble “breaking through” to new highs over the last 18 months as sales have often come out a bit lighter than expected, in part because of slowed growth in China. Optimism has perked up a bit more recently and YUM is now again trading at a nice stiff premium to the market, with a forward PE of about 20.

I don’t know how anyone on earth can resist fried chicken, so perhaps YUM will take over the world eventually … but I don’t find the stock particularly mouthwatering at this valuation. And of course, we didn’t have to pull the Thinkolator out of the garage for that one — anyone can find the stock ticker for Yum Brands in about 30 seconds, and it might take 30 seconds again to learn that KFC is owned by Yum brands if that wasn’t already part of your mindscape.

Then we get into the one that’s really held out as “secret” — it’s about health care, so it’s probably more specifically relevant to Obamacare. He does say that some pharma companies are going to reap windfalls because of all the new customers, but doesn’t specifically hint about any individual ones … until he talks about vaccines. Here’s a bit of the tease:

“Buried in the 2,572 pages of the Affordable Care Act are two little paragraphs that could make you very rich indeed…

“When you clear away all the government gobbledygook, one of these paragraphs says…

“The federal government may enter into contracts with private companies to buy vaccines…

“And the other paragraph says…

“The government not only will be buying more vaccines, but it also will be promoting their benefits…”

So there’s the profit potential — Fitz-Gerald cites reports that the vaccine market could be growing by 15% a year, which would be a nice big tailwind for any company selling a lot of vaccines. Which stock does he like to benefit from that?

Well, he does mention the large cap vaccine leader …

“… you could buy GlaxoSmithKline, which is the market leader in vaccines with 23% global market share…

“Unfortunately, at roughly $50 a share for GSK, the potential for growth is limited…”

That always gets my goat a little bit — it might be that GSK’s potential is “limited” … but it’s not because the stock is at $50 a share, it’s because it’s a mega-billion-dollar company with a history of ups and downs, and because the vaccine business is a relatively small part of a big company. A $2 company is not necessarily one with better growth potential than a $50 company, you have to look at the size and prospects of the individual company, and though low share prices tend to go with small companies that’s certainly not always the case (for those who don’t know, the market capitalization is the number that really tells you the size of a company — that’s the number of shares times the share price. GSK is not a $50 company, it’s a $125 billion company … or, if you want to take it a step further and be more analytical, it’s got an “enterprise value” of $150 billion — enterprise value means you add the net debt to the market capitalization, it’s the price you’d pay today if you bought all the shares and paid off the company’s debts).

But anyway, I don’t want to get too far off track — the pitch is that there’s a small vaccine company Fitz-Gerald likes:

“… what if I told you there was another stock that’s currently selling at only $1.90 a share…

“And this company actually MAKES their own vaccines in the laboratory by synthesizing them out of DNA…

“So theoretically, they can attack virtually ANY infectious disease around the world…

“From AIDS… to Bird Flu… to Typhoid… you name it!

“Buy 10,000 shares of this company and you’ll pay only $19,000…

“But if Obamacare causes it to rise to $5 a share, your position could be worth $50,000….

“If it goes to $10 a share, you’ll have $100,000…

“And if it goes up to $25 a share, you might be sitting on a quarter of a million dollars!”

So … hoodat? Thinkolator sez it’s Inovio Pharmaceuticals (INO)

Which is indeed a synthetic vaccine company, though it’s not yet a vaccine-selling company so they won’t be benefitting from any increase in insured vaccinations immediately — their most advanced vaccine currently is in Phase II trials.

And yes, their platform does allow for the potential for vaccines that can protect against diseases much more fully than current standard vaccine technology — broadly reaching more of the viruses or cancer cells they’re targeting. The platform is called SynCon, and it is basically a vaccine shell that can be quickly directed toward specific antigens and which is combined with some kind of targeted electrical stimulant — in the case of therapeutic cancer vaccines, that means that it looks like they can generate a lot of T cells quickly to fight off the cancer.

I am not a biotech expert by any means, but Inovio has had a remarkable year filled with extremely promising early-stage studies — there was a wave of insider buying in the shares about six months ago when it was down around 50 cents a share, and then they released a half dozen encouraging studies in infectious disease and cancer and the stock shot up briefly to $3. It’s been quite volatile in recent months, but is currently right at about $1.90.

INO says they have enough cash to get them through about the next year and a half, which is good because they’re in the midst of a large number of studies that will be burning up cash — the have six studies they’ll be initiating next year, according to their recent presentation, and while none of them are the huge Phase III studies they’re still bound to cost millions.

So as with many biotechs, this one is all about a platform and about the future — it’s not about revenues or earnings just yet. There is a nice validation of their platform implied by a big deal with Roche for a couple of their vaccines, and the results have certainly sounded awfully good from their early stage clinical trials this year. I don’t know what hangups there might be in getting synthetic vaccines approved by the FDA, or if there will be issues when we get to large-scale safety trials (Phase III), but the efficacy of at least some of these therapeutic cancer vaccines looks impressive early on. The therapeutic cancer vaccines are the first wave for INO, including their lead candidate for HPV and cervical cancer, but I suspect we won’t see a Phase III clinical trial before the end of 2015 so there’s a long way to go before we start thinking about whether a 15% increase in the vaccines business is going to help them post good revenues.

And that’s about all I know about Inovio — the science and promise are enticing, they are in decent financial shape, but they’re not going to get a boost from vaccine spending in general unless it speeds up their clinical trials over the next couple years. I do have positions in two medical-sector stocks, but neither is a biotech or drug developer in a major way, and only one of them, a REIT, has really been touted as a play on Obamacare (the stocks are Ligand Pharmaceuticals and Medical Properties Trust, just FYI). Have an opinion you’d like to share about these guys, or about the other potential vaccine or health care winners of the next era in US health care? Let us know with a comment below.


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