It isn’t often you get fireworks at a Wall Street investor conference. Everyone tends to make nice. So our ears picked up during WellPoint’s presentation at the Oppenheimer healthcare conference this week when Lee Cooperman of Omega Advisors publicly told company officials: “There’s nothing in the record that suggests you know what you’re doing,” a statement followed by a round of applause by others in the crowd.
His complaint was that WellPoint had an aggressive stock buyback program when shares were trading at double what they are now, but has since slowed the buyback despite the lower share price. Meanwhile, the company doesn’t pay a dividend. Cooperman’s point was essentially, give investors the money or reassure investors why you’re keeping it.
WellPoint’s head of consumer business Brian Sassi, who represented the company at the conference, didn’t dispute the remarks. Nor did any other WellPoint official in attendance. One obvious answer, of course, is we don’t want to part with cash during a credit crunch. Instead, officials basically verified that the buyback has slowed and noted that if the board does authorize a dividend it will be a big dividend.
We’re not going to get into a debate over capital management because it’s not our area of expertise. Rather, we’re simply trying to gauge the level of investor frustration at the sagging fortunes of health plans—an by extension the level of frustration at some of the relatively new management teams therein. High and rising seems an accurate assessment.
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