I agree. After a couple of years away from LEE, I am back to accumulating. I am astonished it has dropped this low.
Well IF she wins AND IF ObamaCare fails (no sign this is happening) then IF she has democratic majority in the house and senate, she could possibly TRY to enact a single payer system. Of course, first she would have to want a single payer system. One problem: she doesn't.
How so? Aetna was a large and growing company before Obamacare. It is less than 5% of their revenues now. Centene or Healthnet may have a problem, but none of the big 5. The numbers say the risk, if Obamacare implodes, is next to nothing.
Also, Obamacare is still doing fine. UnitedHealth may pull out, but that's fine. Although large, they were a late comer in the game and poorly prepared. Centene and Healthnet are making plenty off of Obamacare. United Health is just posturing. They're not going to leave a trillion dollar market.
Sentiment: Strong Buy
For those of us who read CMS's (Medicare/Medicaid) own report on what they intend to do in the next 5 years, it includes transferring 80% of Medicare patients to Medicare Advantage, which by definition, is run by private companies like AET/HUM/UNH. The eventual goal is to get to as close to 100% as possible. These are the governments OWN words. They have been raising medicare premiums ruthlessly in the last few years to do this.
I am a physician so I know how the game is played. Let me break this down for you. Healthcare is a $4T business in this country, and yet, the market capitalization of all the major health insurance companies is about 250B dollars. Just one banking company, Wells Fargo, has a larger Market Cap than the major US Health Insurance companies put together. And finance is half the size ($2T) business that healthcare is. Why do people regard the Insurance companies as the big bad guys when just one drug company, JNJ, is again bigger at $280B than all health insurance companies put together? Well thats because insurance companies are the face of the business to consumers, and they are there to control costs and prevent unnecessary tests. Our country pays 2x the cost of healthcare that other modern countries do. There is an incredible amount of unnecessary care. I have seen doctors delay announcing brain death so that the ICU can collect more money from insurance companies and medicare. I have seen hospitals refuse to open Diabetes management clinics because a patient being admitted to the ICU in a diabetes induced coma pays a lot more. I have seen stents placed in healthy coronary arteries so that the cardiologist could pick up another $800 from insurnace.
This is all going to end. The ultimate hidden purpose of Obamacare is to wind down Medicare and place all patients in the hands of private insurance companies. We see this already as Medicare raises premiums unless seniors sign over their benefit into Medicare Advantage. They will get everyone into MA, and then all patients will belong to medical insurance companies. These insurance companies will wield enormous power. It may not be this quarter, but they will be behemoths. Also, unlike Medicare who pays without asking many questions, these companies will scour the books of hospitals in search of the kind of fraud i list above. Free market, baby.
Nah...I will take the buybacks. No taxes to pay on dividends. It just takes more patience to realize the gain. Besides they are clearly optimistic about their shares and would rather keep them lower to buy them up at a better price. In due time this comes back to us.
On another note, I am a physician. Aetna is gonna do great. They are well run and the hospitals they are negotiating with are bloated basket cases. Aetna has been successfully negotiating lower rates. In the next 10 years you will see a ton of hospital bankruptcies. In the aftermath, you will see hospitals negotiate lower rates with supply companies who currently have huge margins. These savings will get passed to Aetna.
Death to health insurance companies? Really? The subsidies that the Obama administration is paying to insurance buyers on the exchanges amounts to hundreds of billions of dollars. So where do you think ALL of that money is going to? Insurance companies. That is the point of the subsidy. It is a subsidy to BUY insurance. That means money goes to insurance companies. Yeah...death. Right.
Secondly, insurance companies will gain market share and take over the space that Medicare once held. The prices that hospitals and doctors charge health insurance companies is benchmarked to Medicare, keeping those costs high. As Medicare fades away, insurance companies are going to negotiate ruthlessly with hospitals, which are by and large not-for-profits with their heads in their behinds. It's going to be an utter bloodbath for hospitals and doctors, and insurance companies are going to mint money. Here is my prediction- In 10 years, Aetna, UNH, WellPoint will be of the same size as Chase, Wells Fargo, BofA.
John, good to have you back. Your insights are always appreciated. Whoever is buying is certainly convinced that LEE is undervalued. Granted, so am I, but it's not like I went off and bought 5-10% of the company. Or, as you mentioned, has a strong connection to LEE.
My other thought is that it may just be some bean counter at a fund who recognizes an undervalued asset. Land, holdings, rights, whatever. One thing that comes to mind is TownNews, which I know you know well. After all, it's network is massive, and according to their own releases, they are the 4th or 5th largest network in the nation behind Facebook, Google, MSN, Amazon. Now, they don't own the content on the hosted sites, so that massive network may not be able to be monetized even one cent. I know you had dealings with TN with your paper. Any chance it is undervalued?
Uh...yeah. Yikes....I knew it was someone big, but they are just going for it now. I presume we will see a release by the end of the week saying who it is and what % they now have. I don't see any news though unless an outright buyout. No way someone would inside trade a refi by buying 5-10% of a small-cap company. If you do that you might as well sit by your desk and wait for the SEC to call.
That is what I cannot figure out. This does not look like mass-driven movement. It has just been too constant and bullet-proof to days when the rest of the market was down. They waited out a couple of soft points in the 1.60s and 1.70s, then at 2.00, and the train keeps rolling. They don't give an F and are just buy buy buying.
Seriously...don't hold your breath. Someone is buying at exactly 2.00. We ain't gonna see much of anything interesting until earnings. I'm gonna say it stays from 1.95 to 2.05 till then.
Someone is clearly buying and their target looks like 2.00. They will buy everything below that and let everything above 2.00 fall back into their laps. This stock is gonna stay like this until 'they' decide to get out. This reminds me too much of last year when the mother just refused to go below 1.12. Someone BIG is buying a lot.
Someone has clearly been accumulating shares. This thing should have sank to the 1.40s, but has stayed exactly in a narrow range for weeks, even on days with microscopic buying. Someone clearly is setting buy orders at fixed prices and scooping everything up that comes to him. It's not Buffet, but someone is accumulating.
I would Post the link but Yahoo blocks links. go to the website for town news. Go to news. Go to archives. Go to the story about the elections.
TownNews is a huge hosting service. Only Google, YouTube and Facebook are more trafficked. Of course, they only host the individual sites and don't own them. How much do we think TownNews is worth?
How is Lee doing with smart phone and tablet integration?
--They are doing very well. Lee went "mobile first" in early 2011. All news is collected with a mind to be placed on a mobile platform first. 20% of all of their pageviews come from mobile and pageviews are growing at 10% per month. This will be interesting to follow. Mobile ads pay even less than desktop ads, and even those pay a fraction of what print does. However, mobile boxes out the ad syndicates, meaning that pricing power may improve someday. Also, by moving to paywalls but leaving the mobile sites largely free, Lee has pushed people into mobile. (which was gonna happen anyways).
Running Google programs for customers?
--Yes. This is far better than the previous yahoo consortium, which offers the customer far less tracking ability.
--Yes. Lee offers classes in nearly all of its local areas on digital advertising, and sets up pages and independent websites for customers. See Lee's LeeLocal services website. This is one thing that Lee definitely does VERY well. Lee's TownNews subsidiary brings in about 30M per year but runs the websites for about 1600 small newspapers and information websites around the country. Btw...this is a very good asset that Lee has tucked away. Lee manages much of the advertising done through TownNews papers. Over 100 million people per month log onto a TownNews site. In the US, only Facebook, Google and Youtube are larger than the TownNews syndicate. If Lee is ever liquidated, this will go for top dollar.
Doing online search, display and RTM programs?
--Yes. See above.
What is the company doing to re-capture the lost classified and preprint revenue from the past 5 years?
--Price competition. It is now cheaper to post a real estate ad in St. Louis in the Post Dispatch than it is to do so on Craigslist. Classifieds are declining overall but the digital picture is brightening.