Opportunities in the Health Care Sector


Speaker Question : Can you talk a little bit about your investment process, specifically within the new world that we're in. How has your process changed? Are there certain aspects of companies that you're looking at more between the financial and growth profiles? Are there areas that you're emphasizing more or less than you were six months ago? And then if you could talk about how important it is for you to talk to company management today or even a sell-side analyst. Teresa McRoberts : Yes, the assessment process has definitely changed. I have spent a lot of time in the last month doing a lot of calls with as many people as I can to understand how coronavirus has affected things that I never thought about being affected. How does this unlock, how do we go back to behaving and what's going to change? A lot of things I think in general will change, but a lot of things in health care will have to change and they will change. I'm spending a lot of time trying to not just think about what's happened, but what happens in the next month until we get to a point where everybody's feeling comfortable about going out and about like they did six months ago? I think we're going to see changes in the health care system and part of it will depend on who's elected and how and what happens over the next few months as to whether we have a second wave that’s even worse than this wave or is the next wave more controlled because we figured out how to deal with it. In some sense, I have to wait and see how it happens and how it evolves and to try to draw lessons from it. I have added more pharmaceutical companies to my portfolio. They have business models that are fairly defensible. I've talked to doctors who said during COVID, I don't want to use product A, B, and C. Instead I want to use products X, Y, and Z just because of how certain things make patients less able to fight off a virus like this. That's a very good thing to know. So I changed my portfolio with some areas. I've added some more pharmaceuticals. I've added some of the companies who are going to investing and dealing with COVID.

COVID is not going to be a something that's gone in a month or six weeks. It's still going to be around and we're going to have to deal with it. And I think it's going to be around for a while. So I certainly want to invest in companies that are going to address that. But I'm also trying to think about if people are going to do fewer in office visits, even after this is all over, who’s going to come up with a way to get us the information that we need. Is there a way to take a blood pressure reading virtually, something that a patient can get at his house? These are things that we need to figure out. I'm talking to management; it's hard right now. Just because they're health care companies doesn't mean they have any better idea than we do about how this evolved. They all know where they need to help find a cure. But that doesn't mean that they understand how bad can it be or have we seen the worst. We're just going to have to wait and see. It is very fluid and I will change things as I feel are appropriate. I have some companies I've owned for a long time that I think are actually very well positioned into this and I'm quite happy to own them, but I've certainly made some changes on the margin and trying to think about how things will evolve.

Dennis Hearns : Thank you for your time today, Teresa.

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