Is My Nose Bleeding? I Just Got "Einhorned"
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“I could tell that my parents hated me. My bath toys were a toaster and a radio.” – Rodney Dangerfield
My name will never be used as a verb. First off, it’s much too difficult for most people to even attempt to pronounce. Looking at it, do you Americanize it? Do you go old school French-Canadian? What’s the proper tense? I’m at peace with it. Believe me, it’s quite alright.
October of last year, Greenlight Capital President and founder, David Einhorn presented his stock findings with a slick, well thought out PowerPoint display, cool music, but no fog machines. The Wall Street wizard offered some light fare prior to naming names, even joking about his own being utilized as a verb when referencing certain stocks. “Herbalife got Einhorned,” which actually sounds like it could leave a nasty scar, what with the “horn” delicately placed within his surname.
One of the stock mentions I found rather interesting from the Fonz of hedge fund managers, was Cigna (NYSE: CI), which probably covered most of those who signed the Declaration of Independence. To be unflinchingly honest, I never gave the company a second look until it was mentioned rather favorably by Einhorn. In light of the Supreme Court upholding the Affordable Care Act, everyone had some opinion on the healthcare sector, even yours truly.
I mentioned Ventas (NYSE: VTR), prior to Einhorn’s stock laser show, and being a meat-eating, red-blooded, all-American male; I thought it would be a rather fun endeavor to embark on my own little fantasy stock steel cage match, since the timing was so fresh with our mentions. Also being a man of my word, I announced to my faithful following (all 15 of you), that I would keep everyone posted on this most public, potentially embarrassing stage, our own unforgiving Internet. Following a respectable showing in 2012 (up 16%), Ventas is already steadily moving ahead year-to-date, up about 2%. About a dollar under their 52-week high ($54-$68), I think the performance will continue the slow grind upward this year and beyond, breaking through the $68 ceiling a few times along the way. As I mentioned when I accepted my own challenge, Ventas clobbers Cigna when it comes to the trusty dividend, doling out 62-cents per share each quarter ($2.48 annually), for a healthy 3.7% yield. Compared to Cigna’s anemic, 0.1% dividend yield, paid in the form of 4 shiny pennies once a year for each loyally held share of stock, Ventas wins that battle.
Cigna had a very nice run in 2012, with the stock picking up over 23% in gains (almost 20% since Einhorn’s mention, though), and currently rides that momentum into 2013, up over 6% year-to-date. The company is nipping at the heels of their 52-week high ($39-$59), and will most likely pierce that number this year, but I expect it to gradually slow down, especially if Einhorn looks elsewhere for more substantial gains.
If individual stocks aren’t part of your risk-reward fabric, the Health Care Select Sector SPDR (NYSEMKT: XLV), which sports a 2% yield, might be a less volatile, more secure holding for consideration. Neither of the 2 stocks mentioned above are in the top 10 holdings, those spots are reserved for dividend dynamos, Johnson & Johnson, and Pfizer that occupy the first 2 positions. But even those high-yielders (3.3% and 3.5%, respectively) check in just below the yield Ventas offers loyal shareholders.
Einhorn clearly has me in a stock headlock with the percentage gain (19% to 6% since our October 2012 mentions). But until my name carries enough weight to be used as a verb, that doesn’t surprise me. As time keeps on ticking, though, I still prefer both Ventas and the Health Care ETF over Cigna.
kmet312 has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!