Michael J. Hearle is a Partner and Portfolio Manager at Clough Capital Partners, which he joined in 2012. He is currently a Portfolio Manager of Clough’s flagship hedge funds, and is the Portfolio Manager for the Clough Healthcare Funds. He also heads the firm’s venture investment efforts in the health care sector. In his exclusive interview with the Wall Street Transcript, he details the current investing environment for the health care sector in the United States. His portfolio choices are informed by many years of experience and in depth research:
“We’re not just focused on any one area, so we will have exposure in hospitals, insurers, biotechnology, pharmaceuticals, medical devices and specialty pharmaceuticals. Depending on trends and what’s happening politically, we move our weightings fairly dramatically. For instance, in 2012, when President Obama was re-elected, we saw Medicaid expansion as a natural extension of what the ACA would put in place. We were heavily invested in services areas at that point, particularly hospitals that had outsized emergency room exposure.”
The rapidly changing rules that surround government funding creates the imperative for quick changes in the Clough Funds portfolio bias: “With concerns about drug pricing, we now see a big disconnect in historic valuations relative to the market. These areas are trading well-below previous highs and trading at deep discounts on a historic basis to their typical multiples.”
The portfolio manager sees a clear path to picking the correct investment thesis: “At the center of the Obamacare debate is the massive expansion of Medicaid. Having people buy insurance on exchanges and forcing a perceived tax is one element, but actually, the amount of insurance that is being bought on the exchanges is very small. Where the real federal spending was directed to was Medicaid expansion, moving the poverty level way up the curve.”
One specific stock pick discussed in the interview was the pharmaceutical company: “Cystic fibrosis went from being a horrible and, in many cases, a terminal illness, but due to the work at places like Vertex Pharmaceuticals (NASDAQ:VRTX), specifically their drug Orkambi, it’s now looking like this will be a chronic but treatable disease.”
To see all the stock picks with detailed reasoning behind their purchase by an experienced money manager, read the entire interview at the Wall Street Transcript.
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