A Health Check on HMO Stocks

Are they good defensive buys? Says CSFB's Joe France: In general, they don't do well when the economy is slowing

Managed-care companies had a stellar year in 2000 as the industry washed its hands of high-profile lawsuits and reaped the benefits of a soaring economy. Plus, in the second half, their stocks were boosted as investors turned to them as a defensive refuge amid the high-tech turmoil. The Amex Healthcare Payor index of managed-care stocks rose 115% over the year. So far, 2001 is shaping up to be a little less promising for HMOs, with the index having shed some 12% in the first few weeks of January.

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