Think Obamacare is going to fail? Now you can you put your money where your mouth is.
A Silicon Valley start-up called Motif Investing has created a way for investors to essentially bet on the law’s failure: It’s selling an investment portfolio full of firms that stand to reap big benefits if the law is repealed or collapses in implementation.
It is also offering an option for investors of the opposite persuasion: a reciprocal portfolio of companies that stand to prosper under the new health care regime.
Motif Investing used algorithms to pick a subset of stocks in the index, giving consumers who invest in Obamacare a cross-section of the industries that will profit from more insured Americans and the cost-containment provisions of the health care law. Consumers who invest in “Repeal Obamacare” get a selection of companies in industries that faced big cuts from the law.
The “betting-on-failure” basket of stocks is heavy into companies that do diagnostics, create medical devices, and provide assisted living for seniors. The pro-Obamacare portfolio is made up largely of pharmacies, hospitals, generic drug companies, and electronic medical record companies.
“There is bipartisan support around repealing the excise tax on medical devices,” said Hardeep Walia, CEO and former Microsoft executive. “So there doesn’t have to be a full repeal to see a benefit to some of these industries.”
In theory, both stock groups could do well at the same time. But the most interesting trend Walia has observed is how the expiration of the drug patent cliffs and the Affordable Care Act’s provisions promoting lower drug costs have caused generic-drug stocks to soar.
Motif Investing offers other specialized portfolios, such as Gay-Friendly Companies, Kings of K Street (companies that spend the highest percentage of their money on lobbying), and No-Glass Ceiling (women-led corporations).
“Do women make better CEOs?” Walia asks. “Are gay-friendly companies more likely to succeed than non-gay-friendly companies?”
You can bet on it.
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