Jared Holz 3.0 6 ideas

Holz highlights that NVO shares are back at 2024 lows while LLY has outperformed, despite both having similar duopoly status in the obesity market. The valuation gap has become "alarming." NVO's new pill (Wegovy oral) has 15x better uptake than the injection launch, and they are aggressively suing compounders (HIMS) to protect their moat. LONG NVO / SHORT LLY. Expect mean reversion as NVO resolves supply issues and flexes legal power. LLY's oral candidate could outperform; compounding pharmacies might win legal battles.

The administration proposed a "0.09% next year" payment increase. Holz notes investors were "positioning long thinking this was going to be a turnaround year," but now we are entering a "pocket now for a year, maybe two, in which earnings don't expand or grow." The macro environment for government-sponsored healthcare has shifted from a growth story to a stagnation story. While the stocks have dropped 20%, the fundamental driver for stock price appreciation (earnings growth) has been removed for the medium term. Buying the dip is premature because the capital will be tied up in a sector with no catalyst for 12-24 months. Do not buy the dip yet. The thesis has shifted from "turnaround" to "stagnation." The final ruling in April could be revised upward significantly, causing a relief rally (short squeeze).