Buyback Buys: WellPoint and Goldman Sachs
01/02/2014 7:00 am EST
Among the latest new additions to the model portfolio at The Buyback Letter are two stocks that have made it on the newsletter's buy list numerous times already; here, buyback expert David Fried, explains the ongoing attraction of these shares.
We dabbled in WellPoint, Inc. (WLP) four times between 2009 and 2012, and bought it earlier this year, in August, as well. The company has strong buyback activity and has reduced shares outstanding by 8.06% in the past 12 months.
WellPoint is the second-largest health insurer in the US, with more than 36 million members in its affiliated health plans and 68 million individuals served through subsidiaries. In fact, one of every nine Americans is a member of a WellPoint affiliated health plan.
Healthcare reforms, such as the formation of health insurance exchanges, and the government providing health insurance to citizens who can't afford it, will be the biggest contributors to this growth. WellPoint is well positioned to capitalize on the potential growth.
WellPoint's operations are strengthened by its independent license for marketing products under the Blue Cross Blue Shield Association (the most recognized brand in the industry), and a strong capital position.
We have also bought Goldman Sachs (GS) a few times over the years, from 2005-07, and then twice already this year. It has floated back to the top of our filters.
GS, of course, is a behemoth in investment banking, trading, and asset management that provides a wide range of services worldwide to corporations, financial institutions, governments, and high-net-worth individuals.
After 144 years of operation, it is the gold standard on Wall Street. GS joined the Dow Jones Industrial Average on September 23, validating its position as a leading investment bank in the market.
Year-to-date total return has been 34.8%, with total revenue for the trailing 12 months at $34.7 billion, and net income for the trailing 12 months at $8.6 billion. Market cap is $76.6 billion. Management has reduced shares outstanding by 6.32% in the last 12 months.
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