When Amazon, Berkshire Hathaway along with J.P. Morgan announced a partnership to cut costs along with improve services across the health care industry, CNBC’s Jim Cramer had to weigh in.
The joint venture, organized by Amazon’s Jeff Bezos, Berkshire Hathaway’s Warren Buffett along with J.P. Morgan’s Jamie Dimon, will aim to be “free by profit-producing incentives along with constraints,” the companies said on Tuesday.
“the idea’s bad enough in which the most important man in finance, the most important man in retail along with the best investor alive are teaming up to tackle the problems of our health care system, although even worse for the industry, they’re doing the idea for free,” the “Mad Money” host said. “the idea will be very hard to compete with someone who doesn’t care about turning a profit.”
The initiative elevates the discussion around rising health care costs inside the United States, which Cramer said the three titans view as “the ultimate tax on the system.”
In May 2017, Buffett said in which in 50 years, health care has gone by being 5 percent of U.S. gross domestic product (GDP) to 17 percent with few solutions in sight to curb surging costs.
“today in which’s going to change,” Cramer said. “today there will be something on the horizon, a company of his own creation with the most technologically savvy provider of what people want along with the smartest banker of our time.”
The “Mad Money” host also noted the analyst community’s eerily calm reaction to the deal. No analyst covering health care retailers like CVS or in-the-line-of-fire middlemen like Express Scripts wants to come out along with slash the estimates for those companies right away, he said.
“although I bet the analysts who actually cover Jeff, Jamie along with Warren’s companies — Amazon, J.P. Morgan along with Berkshire Hathaway — might view in which coalition having a very different, awestruck attitude. I’ll tell you, if these guys were coming after my business, I’d be terrified,” Cramer said.
Some analysts were able to compose sound defenses, including in which UnitedHealth’s Optum service will be already tackling costs along with in which the middlemen save costs by buying as a group.
although Cramer came back with some retorts: the incumbent companies are still not as digitally savvy as in which brand new player will be, along with their teams of government lobbyists won’t be of any use when the idea comes to Bezos, Buffett or Dimon.
What does in which mean for investors? Cramer’s answer was somewhat complicated, particularly for investors who can’t wait to get in on the action.
Even leading players like UnitedHealth aren’t safe by being inside the “penalty box” for some time, he said.
“You need a health care company in which’s survived every onslaught imaginable,” Cramer said. “You need a road warrior having a stock in which you’ll want to load up on into weakness if Amazon talks about in which effort on its Thursday night conference call, or the non-profit comes up having a name or a chief executive.”
Investors also need a stock in which will be cheap with positive prospects in which are supported by the technicals, the “Mad Money” host said.
“In short, you need Centene,” he said. “Centene’s an expert at providing its clients with high-quality care at the lowest possible costs, along with yet the idea’s been producing its shareholders a fortune.”
Centene, a large, enterprise-facing provider of Medicare along with Medicaid, was even blessed by technician Marc Chaikin among the best health care stocks on Monday, Cramer added.
Still, Cramer maintained in which buyers should time their investments wisely.
“I don’t like to enter a blast zone on the first day of a sell-off, especially when there are still plenty of stocks outside the blast zone in which have come down,” the “Mad Money” host said. “So if you want health care exposure, I suggest waiting until the group’s a little less radioactive. although if you just can’t resist, if you need to pick one up in which week, I’d say buy Centene.”