I take it you are a lot younger than I am. I'm looking at about 5 years to retirement, so dialing down risk is attractive. I have a balanced portfolio but over the past three weeks we increased cash, transferred a lot of my wifes 403B into ACVVX (a market neutral fund). The funny thing is that I was initially attracted to CGMFX years ago based on Heebner's flexible charter (ability to short). After 2008-2009 it became apparent that he was somewhat of an equity perma -bull. I was just looking to see if anyone else thought that maybe his horrible performance during the financial crash would prompt him to behave differently, if conditions deteriorated. Prior to 2008, I recall morningstar giving CGMFX 5 stars.
Thanks Keith and Riv.
I saw the US gvt bond short and that speaks volumes to the risks that Heebner sees (more concerned with rising interest rates), however, the secular stagnation scenario now appears more pressing. Keith is probably correct that a Heebner who has cut his chops picking bull market real estate cycles is not going to to turn into a Jim Chanos.
Not trying to interupt the political discussions, however with the uncertainty in the market, is there any chance Heebner will adjust to a market neutral stance and short overvalued equities?? I see that he likes the home builders and that it is generally working out for him. However, I'd hate to see him repeat the mistakes of 2008 when he has a flexible mandate.
Ihub "Natural-Resources-The-Global-Demographic-Tailwind" may be more appropriate since there is already an active community there. They allow the posting of links so it is a huge step up. No charges for the basic service but if you want expanded capabilities(filtering posts for content etc) then a suscription is required.
I know YHOO MB and intelligent posts is a bit of an oxymoron.
The market set up is looking bad, so I will not be surprised if GHDX tests you buy in level. The prostate reimbursement and the recent DCIS article stressing watchful waiting as an option should be positives. The guidance for profitability within the next 6 month period is within the period that the market is supposed to discount. However, in this environment indiscriminate selling can hit even small stocks with limited float, like GHDX. Mutual funds and Hedge funds with redemtion requests are likely to pound the market in the short term.
You sound like you keep your buy list handy for these kinds of down drafts. I think you will get good opportunities in the next few weeks.
I think this is somewhat a parallel to 1998 when emerging market currencies (and there stocks) tanked against developed markets. During the last week, the US dollar has begun to weaken, and the Fed rate hike is all but off of the table. So I think the groundwork for the Brazilian recovery is being laid right now. I think 2016 will be a good year for SBS. They are reaching the end of the rate hike cycle and Levy seems to be following Volkers playbook for quashing stagflation. I think that Dilma is backing off and giving him room to manuver since many of her populist government give aways have been shown to be the cause of the recession.
I don't have fears about SBS being nationalized. The case study for that is Venezuala and no-one in Latin America wants to follow that lead since the country is in total disarray. If anything the granting of the increased rate tariffs shows that they are incline to accept market type approaches (i.e., as a commodity becomes more scarce its value increases and users should pay more for it).
SBS is relatively immune to factors that would cause bankruptcy. They are the only provider of necessary services in a growing population area. The river diversion project will help shore up concerns about global climate change (however, this may take into 2017). If this cycle plays out like previous ones, SBS should have many years of growth. So, I continue to average down. However, I would not recommend SBS to anyone that does not have at least a 3 yr investment horizon.
Good buy. Probably about $10 less than the average paid by the Baker bros. There is not too much intellegent commentary on this board. Don't let it get you discouraged. There is a place for a medical diagnostics company that can squeeze unnecessary costs from the system.
There is an old adage that stocks that do well on horrible days like today are the ones that are poised to rebound when the market turns. As I write this GHDX has turned green.
Chicago Trib has a long article about the PJM bid resulting in substantial increases in future electric power bills. EXC is the projected winner in thebidding. Quad Cities Nuc did not get a bid. So EXC is still looking for releif from the state of IL or they will shut it down.
The 2nd Qtrwas ugly but I don't think the US Dollar is going to keep strengthening. I think the Fed is going to look at the global situation and hold off on rate hikes. So emerging markets may finally find a bottom soon. I know Yahoo sometimes messes up the Foreign currency conversion on the dividend. Was $3.60 USD paid out last year (Mornstar indicated payout)? I figure fuel costs should continue to act as a tailwind.
I'm often early but it usually works out if I hold through long enough. I'd just like to know where the dividend is.
The earnings certainly benefited from the Tariff increase. I don't think it will be revoked, at least not while major projects are being undertake to stem leakage and divert water from the Iguape River.
That said, SBS is firmly out of favor for the following reasons:
1) it is a value stock at a time when growth is outperforming;
2) it is in a commodity producing emerging market at a time when the advantage is flowing to commodity consuming emerging markets.
3) the drought uncertainties are puting a lid on the price.
Even given all these issues, I averaged down in my position today. Compare SBS to Veolia or Suez and the value is apparent. Demographic growth will continue and it is a necessary product that does not face competition. The technicals suggest to me that a bottom is at hand. I may be early, but in 10 years this could easily be up 500%.
Certainly GHDX's guidance anticipates the proportion of market share likely to gained with Prolaris in the market with a head start. The Medicare market represents about half of the market and other insurers will come on line quickly now that CPT codes will exist. This should also help with existing receivables that were being resolved on a case by case basis.
Interesting that the MYGN approval of Prolaris came out only a a day earlier. Prolaris appears to be more narrowly defines to "Low Risk" with Gleason score
Actually the efforts to stem losses runs through 2018.
Another interesting discussion
"Tapping new water sources: The Macro-Metropolis Plan
One of the long-term plans to provide more water to the Metropolitan area of São Paulo is the Macro-Metropolis Plan, which covers three metropolitan regions: Metro São Paulo; the meso-region of Campinas with 3.6 million inhabitants (2005 est.) and 49 cities; and the coastal metropolitan region south of São Paulo. Overall this macro-metropolis includes 152 municipalities with 30 million inhabitants. The tentative plans to supply this region with water consider adding 80m3/s of water supply to the area. A water diversion project, the Sao Lourenco Water Producing System, is to bring water from the Iguape River in the Ribeira valley 80 km south of MRSP. The $823 million system to provide 4.7 cubic meter per second will be developed under a public-private partnership. In early 2013 bidding was underway and the system is expected to be operational in 2017."
Very interesting discussion of SBS on wikipedia. Search Sabesp and Sao Paulo Water distribution. Dang yahoo won't let me even sneak part of the link into this post.
This section (below) suggests that SBS is experiencing about 28% non revenue generating water distribution. A major program to address this is slated to run through 2017. I guess one of the benefits to the drought is that SBS is becomming more efficient. The other benefit is that it created the crisis necessary to win approval of the extraordinary tarrifs.
Inefficient water use
The level of non-revenue water in the MRSP is estimated at 40%, meaning that 40% of water supplied to the network is either lost through leakage or, even if delivered to customers, is not being billed. In the municipalities served by Sabesp the level of NRW is only 28%, while it is more than 50% in some of the municipalities that are directly in charge of distributing water that is supplied to them in bulk by Sabesp.
Don't think so. I thought the conference call was pretty definative that 4th qtr profitability is based on CMS approval of Onco DX prostate reimbursement. I think that MYGN and GHDX approvals may come at the same time. GHDX does not discuss the specific boundaries/wording for the approval. They have on numerous occasions mentioned that the Onco Dx test is not subject to the false positives caused by specimen heterogeneity which is an issue for their competitor (some discussion of this in the MYGN comments I posted). This could clear the way for a less restrictive reimbursement profile. If so, the test will do better.
I think the big objectors are likely to be intuitive surgical, proton beam radiation manufactuers, etc. and from some Urology practices. They are highly dependent on selling expensive machines that can only be justified if the current overtreatment trends continue. The Urologists can justify overtreatment and make good fees for conducting these procedures. Insurance companies and Medicare will need to be the drivers for the GHDX prostate test to succeed.
I think the market grossly underestimates the critical need for actionable prostate cancer diagnostic tests. My investment here is based on this thesis. I think GHDX has pushed the schedule back slightly over the past year. Initially they talked in terms of CMS approval during the 2nd half 2015. Now they talk in terms of 4th Qtr. MYGN is now talking about reimbursement code approval in Late October, so the schedules are starting to suggest they will coincide.
The overall market cap of GHDX is pretty miniscule compared to the worldwide market potential for the prostate test. Even if they split the market with another diognostic firm, the potential is still great.
I have not heard them roll back the guidance of $1B in sales by 2020. The next 2 qtrs should tell whether this is going to happen.
For whatever reason SBS gets whipsawed by macro trends that affect many commodity producing emerging marketrs. You would think as the sole provider of necessary services in a growing population area that the share price would be less influenced by the overall conditions. I think the stock is heavily influenced by the flow of hot money momentum type investors. They largely abandoned Brazil when the economy turned down and Dilma won a second term.
I looked at the correlation to drought related news and it bacame apparent that the macro economic conditions were a bigger driver. That said restoration of the reservoirs to more normal levels would help restore profits that have been reduced by the bonus program.
Last week on CNBC, Mark Mobius of Templeton Emerging markets predicted that 2016 would be Brazil's year. Since a 3 year downturn would be very unusual, I'd say SBS would be more than overdue for a rebound in 2016.
The MyGN conf call resulted in some speculation about the specific CMS approval wording. Based on some of the posts there appears to be concern that the approval will be tied to a relatively narrow Gleason score. They now appear to be looking at October t for an approval date.
While Onco Dx appears to be in a similar limbo, it appears that the the submittal timeframe advantage that Prolaris had may be evaporating. as I mentioned, I think both tests are getting alot of public comment opposition from the companies that benefit from the overtreatment of prostate cancer.
Fom Mygn May 25th
"And of course, the decision that ultimately controls Medicare coverage of Prolaris is due in the next month. Rejection is pretty much inconceivable, but the language around what kinds of cancers the test is approvable for will be important (I expect the guidance to be very conservative to begin with. The boundary to look for is between involvement of both lobes of the prostate and involvement of the seminal vesicles also. If they specify in terms of Gleason score, the boundary to look for is between 3 and 4. Since part of the case for Prolaris is that Gleason Score is unreliable, limiting prescribing based on that number would be a negative.) Firmness of language is also significant. Gentler language permits independent investigation of the test's value in near-boundary disease. "
From the MYGN Board 19 hrs ago
"I was disappointed. While the bear case remains dead (that's the thing about death; it's permanent), there wasn't anything stirring for the bulls. The best short-run news was that even though CMS approval for Prolaris was delayed Yet Again, there is now a specific date, and a promise from CMS that the terms of the LCD will not be more restrictive than the proposed coverage that's long been on the table. I'm Not A Lawyer (tm), but the case for retroactive reimbursement looks on the surface like it could succeed; that would be a nice cash gift, but of course it wouldn"