Jonathan Good, portfolio manager. Baird Asset Management
Insulet (NASDAQ:PODD) and Kinsale (NYSE:KNSL) are two gems that should be on investor’s buy list according to Jonathan Good who joined Baird Asset Management in 2006.
He has 21 years of investment experience.
He is the Portfolio Manager for the Small/Mid Cap Growth strategy and a Senior Research Analyst covering health care for the growth strategies.
Before joining Baird Equity, he worked at Gartmore Global Investments as an equity analyst for their Global Health Sciences Fund.
Earlier, he spent five years at William Blair & Company as an equity research associate covering biotech, life sciences, diagnostics, and orthopedics.
He has a degree in applied and biomedical sciences from the University of Pennsylvania and received an MBA from the Kellogg School of Management at Northwestern University.
His 3,392 word interview, exclusively in the Wall Street Transcript, details his recommendation for several stocks.
The Baird portfolio manager bangs the table for both Insulet (NASDAQ:PODD) and Kinsale (NYSE:KNSL).
“One really interesting company that we’ve held for quite a while and continue to really like is Insulet (NASDAQ:PODD).
It’s often referred to as PODD, which is their core diabetes pump, which is called the Omnipod. I think diabetes is a very closely followed space with a tremendous amount of innovation in recent years.
For the longest time, there has been this belief in medical devices to create the artificial pancreas. This is an idea that probably came about 20, 30, maybe even 40 years ago.
And over the last couple of years, technology has come to the forefront where this has been possible.
So Insulet has a patch-based pump that you can wear on your arm and then it’s tied with a continuous glucose monitor, which monitors your glucose readings throughout the day.
There’s an algorithm in their software that helps both those two devices communicate with each other. You’re able — for a Type 1 diabetic — to have an automated insulin pump.
And so, this has been something that got approved about a year ago and then there’s been a lot of interest and enthusiasm for an automated insulin delivery system in a patch format.
What makes Insulet really interesting, even more so than their technology, has been their business model, which they’ve coined as pay-as-you-go.
And because this has been a disposable patch pump, from an insurance standpoint, you’re able to go to the pharmacy and get a pump for a low monthly payment — as opposed to an insurer who in the past would have spent several thousand dollars on a more permanent pump that you’d wear for four years.
And because diabetes, unfortunately, is a tremendously growing market.
If you have poor exercise or poor diet or are overweight, you’re likely to have a potential increased risk for diabetes.
This big growing market has just been an opportunity for a pump company then to come on the scene.
And so Insulet, again, has just had a big advantage with not only their business model, but also just phenomenal technology and really big growth prospects going forward.
Insulet is not the cheapest stock. This is something that we recognize, that as the stock has done really well, the multiple has expanded.
I would certainly say that as we look at this business in 2023, expectations are high.
But again, I think they just have an advantage, not only with a phenomenal technology, but a really strong business model and there’s just a really long runway for growth even if the stock may look expensive as it sits today.”
Kinsale (NYSE:KNSL) is another top rated stock from the Baird analyst.
“Another business in financials that we’ve liked for a long time is an insurance company called Kinsale (NYSE:KNSL).
What has been interesting to me about this business over time is, I’m certainly not an insurance expert, but here was a company with an entrepreneurial CEO who saw an opportunity in a niche market in insurance.
It’s called excess and surplus.
This might be a nightclub or a restaurant, or some type of business that doesn’t really typically fall into a traditional property and casualty insurance bucket.
What Kinsale has been able to do is to grow quickly by both gaining market share and doing a better job of pricing their business.
They feel that their competitive edge is just a better IT system and a management team that is only focused on this market. And so, they’ve been able to show really strong growth for the last several years.
And again, it’s a CEO that’s done a phenomenal job in managing this business. Even with their recent success, I think their total market share is still 2% or less of the total market.
Some companies have struggled in this market segment where a company will come in, they’ll win a bunch of business in this area, then some event will happen, they’ll do poorly, they’ll lose money and they exit.
And, just like we do a really good job focusing on mid and SMID growth stocks, this is a management team that’s been really focused in this excess and surplus segment of the insurance business. It has just done really well over a long period of time.”
Get the complete detail on Insulet (NASDAQ:PODD) and Kinsale (NYSE:KNSL) and many more from Jonathan Good’s exclusive interview in the Wall Street Transcript.
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