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Portfolio Holdings Update

by Fortem Financial January 31, 2018

Amazon, Berkshire Hathaway, and JPMorgan Chase, three of America?s largest companies, announced plans today to start a separate, non-profit company with the goal of improving health care for their U.S. employees. Warren Buffett said in a statement that the three companies do "not come to this problem with answers. But we also do not accept it as inevitable.? This announcement, albeit with vague details, caused shares of companies across the health care industry, from health insurers, to distributors, to pharmacy-benefit managers, to drug-makers, and retail pharmacies, to drop. 

It is clear the joint venture is not an immediate threat to the current health care ecosystem and it remains to be seen what type of ?negative? impact it may have on the various healthcare providers. We believe it is likely the three companies will be able to save on health cost given they have nearly 1 million employees combined, which gives them enormous scale, and the companies have fantastic talent and enormous financial resources behind this new endeavor. If the joint venture finds a feasible solution to lower costs and improve care for the broad population in the country, we believe that is a long-term positive for society and the health care industry. 

That said, we doubt a non-profit business model is scalable across diverse needs of the whole country. In addition, the three companies represent largely an internet retailer, an insurance company, and a financial conglomerate. If their strategy is to create a low-cost provider to make insurance more affordable at the employer level, while providing employees with more transparency, knowledge and control, that seems to be in sync with the consolidation and collaboration trend the industry has been experiencing. CVS?s latest attempt to acquire Aetna is in particular a bold vertical integration move to combine insurance with PBM with retail pharmacy, so care can be better coordinated and more conveniently accessed with the overall cost lowered. 

It is clear the healthcare industry is undergoing tremendous changes right now and the status quo won?t bring continued success to industry practitioners. Like upheavals other industries have experienced, only the largest, the nimblest, the best financed companies will survive and thrive. We continue to believe CVS and WBA are indispensable companies in the healthcare ecosystem and we remain investors in them.

* Source: The Applied Finance Group  

Please call us or email us with any questions.

Sincerely,

Fortem Financial

760-206-8500

 

 

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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