Aberdeen’s Paul Atkinson is buying back into US healthcare stocks following the announcement of President Obama’s insurance reforms.
Deputy head of US equities Atkinson, who manages the £127.5m American Equity fund, says the ongoing debate over the way medical treatment is paid has allowed him to use weaknesses in company valuations to pick up strong brands cheaply.
Atkinson has used the uncertainty to increase exposure to the sector, with stocks including Gilead Sciences and Baxter International rising from 1.5% to 2.9% and 2.6% becoming two of the biggest names in the portfolio.
“At times last year, the sector was at 20-year valuation lows prefaced by the whole healthcare reform debate,” Atkinson says.
“The uncertainty it created has given us some good opportunities to buy into differentiated healthcare-related models and Gilead is a prime example of that.
“We are confident it can do double-digit organic revenue growth this year and we are paying a sub-market multiple for that. It is part of a general move into more selective healthcare with more positive revenue streams less exposed to healthcare reform or generic competition.”
Atkinson says he is well aware of the macro headwinds that will pressure the US economy for some time to come, but also believes the US is home to some of the best companies in the world.
Signs of renewed growth are already emerging, he adds.
“Last year, many of our holdings were able to cut costs on a permanent basis, so as to create a strong platform to drive earnings increases when organic growth returned,” Atkinson says.
