Steve Grasso said he liked Unitedhealth Group (UNH) as a best-in-breed play.

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Jon Najarian says when the market rallies you want to buy underperformers. So which underperformers is he looking at buying into year’s end? Here’s the short list: UnitedHealth (UNH): up 9% in 2009 Becton, Dickinson (BDX): up only 9% year to date, Lowe’s (LOW): up only 2% year to date.

He said he'd even short stocks such as WellPoint (WLP), Humana (HUM) and UnitedHealth (UNH), even though the long-term picture might be sound. He said people overreact when they hear the term "public option" and begin to short these stocks, and "Washington doesn't care what happens to stocks." In the end, Cramer said, it won't hurt the stocks, "but who wants to be long?"

The public option is back on board, thanks to Harry Reid, so the notion that health care is finished and that Washington can focus on creating jobs is now a total pipe dream. More pain for UnitedHealth Group (UNH), WellPoint (WLP) and Humana (HUM).

I have calls on Aetna (AET), UnitedHealth Group (UNH) and WellPoint (WLP), adds Karen Finerman.

A problem with the stocks is that they pay little or no dividends. "The capital management of this industry has been nothing short of disgraceful," says Leon Cooperman, the chief executive of Omega Advisors, a New York investment firm that holds UnitedHealth and WellPoint shares. UnitedHealth's dividend is just 0.1%; WellPoint has none. These companies have wasted billions of dollars on aggressive share-repurchase programs at high prices, while management has cashed out options and sold stock. UnitedHealth, for instance, has bought back $15 billion of stock since 2005 at an average price of $42 a share, way above the current stock price. "The industry is in an uncertain environment because the Obama administration is hostile to it," Cooperman says. "So why are they buying back stock? They should return money to shareholders in dividends, and let shareholders decide what to do with the money." Cooperman says both UnitedHealth and WellPoint would appreciate 20% if they paid 40% of profits in dividends. At current share prices, a 40% payout ratio would result in 5% dividend yields. One of the arguments against high dividends is that they would play into the hands of political critics like House Speaker Nancy Pelosi, who has complained about the industry's "immoral profits." Cooperman opines that if this country has gotten to the point "that shareholders aren't entitled to a return on their investment, God help us all."

But he also is enamored of Aetna (AET), UnitedHealth (UNH) and Aflac (AFL). "This is the best time to buy health care since HillaryCare," in the early 1990s when the prospect of national controls on the industry sent the stocks reeling, says Miller. The possibility of a public option in ObamaCare, where the federal government competes with private insurers, is receding. At the same time, more people will be getting managed care.

People are getting older

Cramer's colleague Dan Fitzpatrick thinks UnitedHealth's (UNH) chart is the worst in the book, said Cramer. The stock had been hitting higher lows, indicating more aggressive demand for the stock, he said. "Buyers would pounce on UNH whenever it pulled back to its 50-day moving average," he said, which is called "support." But starting last Wednesday, the stock started to sell off, and Fitzpatrick now says the pattern is broken. That support line has turned into "resistance," said Cramer. According to Fitzpatrick, UnitedHealth is headed lower, maybe even much lower.

medicare cuts

doesn't make money

it just has not performed.

underperforming

fad

unrealistic revenue expectations in regards to their Medicare and Medicaid Business.

not performing

one of the main arguments for socialized medicine

DONT LIKE admin setup

Democrats