IHF: Healthcare Dashboard For September

seekingalpha09-17

Jacob WackerhausenThis article series includes aggregate industry metrics in healthcare. It may also serve as a top-down analysis of healthcare ETFs like the Health Care Select Sector SPDR ETF (XLV) ...

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It may also serve as a top-down analysis of healthcare ETFs like the Health Care Select Sector SPDR ETF (XLV) ...</p>\n\n<a href=\"https://seekingalpha.com/article/4721445-ihf-healthcare-dashboard-for-september\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0097036916.USD","symbol_name":"贝莱德美国增长A2 USD","start_time":0,"source_url":"https://seekingalpha.com/article/4721445-ihf-healthcare-dashboard-for-september","article_id":"2468876523","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1555515663/image_1555515663.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2468876523","pubTimestamp":1726523425,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Jacob WackerhausenThis article series includes aggregate industry metrics in healthcare. 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It may also serve as a top-down analysis of healthcare ETFs like the Health Care Select Sector SPDR ETF (XLV) and iShares U.S. Healthcare Providers ETF (NYSEARCA:IHF), whose largest holdings are used to calculate these metrics. Shortcut The next two paragraphs in italics describe the dashboard methodology. They are necessary for new readers to understand the metrics. If you're used to this series or if you are short of time, you can skip them and go to the charts. Base Metrics I calculate the median value of five fundamental ratios for each industry: Earnings Yield (\"EY\"), Sales Yield (\"SY\"), Free Cash Flow Yield (\"FY\"), Return on Equity (\"ROE\"), Gross Margin (\"GM\"). The reference universe includes large companies in the U.S. stock market. The five base metrics are calculated on trailing 12 months. For all of them, higher is better. EY, SY and FY are medians of the inverse of Price/Earnings, Price/Sales and Price/Free Cash Flow. They're better for statistical studies than price-to-something ratios, which are unusable or non-available when the \"something\" is close to zero or negative (for example, companies with negative earnings). I also look at two momentum metrics for each group: the median monthly return (RetM) and the median annual return (RetY). I prefer medians to averages because a median splits a set in a good half and a bad half. A capital-weighted average is skewed by extreme values and the largest companies. My metrics are designed for stock-picking rather than index investing. Value and Quality Scores I calculate historical baselines for all metrics. They are noted respectively EYh, SYh, FYh, ROEh, GMh, and they are calculated as the averages on a look-back period of 11 years. For example, the value of EYh for healthcare providers in the table below is the 11-year average of the median Earnings Yield in this industry. The Value Score (\"VS\") is defined as the average difference in % between the three valuation ratios (EY, SY, FY) and their baselines (EYh, SYh, FYh). The same way, the Quality Score (\"QS\") is the average difference between the two quality ratios (ROE, GM) and their baselines (ROEh, GMh). The scores are in percentage points. VS may be interpreted as the percentage of undervaluation or overvaluation relative to the baseline (positive is good, negative is bad). This interpretation must be taken with caution: The baseline is an arbitrary reference, not a supposed fair value. The formula assumes that the three valuation metrics are of equal importance. Current data The next table shows the metrics and scores as of writing. Columns stand for all the data defined above.        VS QS EY SY FY ROE GM EYh SYh FYh ROEh GMh RetM RetY   HC Equipment -26.30 2.33 0.0235 0.2038 0.0132 12.97 65.16 0.0273 0.2425 0.0259 12.55 64.30 5.91% 15.71%   HC Providers -13.06 -12.81 0.0436 1.3791 0.0433 13.93 19.54 0.0503 1.3416 0.0607 15.51 23.11 5.00% 25.57%   Pharma/Biotech -36.41 -23.96 0.0126 0.2016 0.0194 12.09 78.25 0.0344 0.2197 0.0311 21.91 80.77 2.63% 24.31%   Life Science Tools -11.81 -5.61 0.0264 0.1797 0.0287 13.09 58.69 0.0277 0.2595 0.0287 16.23 54.27 1.05% 10.20%   Click to enlarge   Value and Quality chart  The next chart plots the Value and Quality Scores by subsector (higher is better). Value and quality in healthcare (Chart: author; data: Portfolio123)Evolution since last month Valuation has slightly improved in pharma/biotech and life science tools, while it deteriorated in healthcare equipment. Variations in value and quality (Chart: author; data: Portfolio123)Momentum The next chart plots median returns by subsector. Momentum in healthcare (Chart: author; data: Portfolio123)Interpretation The healthcare sector as a whole is overvalued by about 19% relative to 11-year averages, based on my monthly S&P 500 dashboard. The life science tools and healthcare providers industries are the least overvalued subsectors. The next paragraph focuses on an ETF investing in the latter. The pharma/biotech subsector displays the worst value and quality scores. Focus on IHF iShares U.S. Healthcare Providers ETF (IHF) was launched on 05/01/2006 and tracks the Dow Jones U.S. Select Health Care Providers Index. It has a total expense ratio of 0.40%, while the sector benchmark XLV charges only 0.09%. IHF holds a portfolio of 66 stocks and is very concentrated. The top 10 holdings, listed in the next table with some fundamental ratios, represent 73.4% of asset value. Risks relative to the top two names, especially to UnitedHealth Group, are very high.   Ticker Name Weight (%) EPS growth %TTM P/E TTM P/E fwd Yield (%)   UNH UnitedHealth Group, Inc. 24.44 -32.34 39.30 21.46 1.41   ELV Elevance Health, Inc. 13.59 6.81 19.31 14.78 1.18   CI The Cigna Group 7.79 -42.07 28.69 12.80 1.54   HCA HCA Healthcare, Inc. 4.7 4.80 18.52 17.57 0.67   VEEV Veeva Systems, Inc. 4.68 12.70 58.17 34.96 0   CNC Centene Corp. 4.51 8.60 14.30 11.04 0   CVS CVS Health Corp. 3.92 146.55 10.32 8.84 4.59   HUM Humana, Inc. 3.7 -47.64 22.92 19.87 1.10   MOH Molina Healthcare, Inc. 3.21 15.77 19.61 15.22 0   LH Labcorp Holdings, Inc. 2.85 -43.13 41.99 15.12 1.30   Click to enlarge IHF has slightly underperformed XLV since its inception, but the gap in annualized return is hardly significant : 26 bps. However, it shows a much higher risk measured in maximum drawdown and historical volatility, resulting in a significantly lower risk-adjusted performance (reported as Sharpe ratio in the table below).     Total return Annualized return Max Drawdown Sharpe ratio Volatility   IHF 564.52% 10.87% -58.82% 0.58 18.53%   XLV 594.69% 11.13% -39.17% 0.74 14.07%   Click to enlarge Data calculated with Portfolio123 IHF is 2.7% behind XLV over the last 12 months: IHF vs XLV, 12-month total return (Seeking Alpha)In summary, IHF offers capital-weighted exposure to healthcare providers. It's overweight in the top holdings. Two of them, UnitedHealth Group and Elevance Health, represent 38% of the portfolio’s value. Additionally, IHF management fees and risk metrics are significantly higher than for the broad healthcare sector ETF, and liquidity is much lower. IHF is not very compelling as a long-term investment, but it may also be used as a swing trading or tactical allocation instrument. Dashboard List I use the first table to calculate value and quality scores. It may also be used in a stock-picking process to check how companies stand among their peers. For example, the EY column tells us that a large healthcare provider company with an earnings yield above 0.0436 (or price/earnings below 22.94) is in the better half of the industry regarding this metric. A Dashboard List is sent every month to Quantitative Risk & Value subscribers, with the most profitable companies standing in the better half among their peers regarding the three valuation metrics at the same time. The stocks below are part of the list sent to subscribers a few weeks ago.   EXEL Exelixis, Inc.   COLL Collegium Pharmaceutical, Inc.   INVA Innoviva, Inc.   ALKS Alkermes Plc   HRMY Harmony Biosciences Holdings, Inc.   COR Cencora, Inc.   GEHC GE Healthcare Technologies, Inc.   THC Tenet Healthcare Corp.   DVA DaVita, Inc.   SEM Select Medical Holdings Corp.   Click to enlarge  It's a rotational model with a statistical bias toward excess returns on the long term, not the result of in-depth stock analysis.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2468876523"}