Brokerage firm focuses on investment potential of obesity

With obesity stats on the rise, one investment firm provided investors with background information on the issue and how it may impact their investment decisions with two different panel discussions that have included Cybex and Nautilus.

With obesity stats on the rise, one investment firm provided investors with background information on the issue and how it may impact their investment decisions with two different panel discussions that have included Cybex and Nautilus.

Adams Harkness, a research and investment firm serving the institutional market in North America and Europe, has studied and offered investment information on healthy living companies since the late 1990s. It recently started bringing health experts, public companies and investors together to discuss the issue of obesity and its financial effect on investments. The first event was in Philadelphia in November and included Nautilus, and the second session in January, held in Boston, included Cybex. Adams Harkness has plans to do another event in spring, possibly with a panel of experts and companies specifically focused on fitness.

Panel discussions featured a nutritionist, a specialist in diabetes, a gastric bypass surgeon and an insurance benefits expert, explaining the "obesity epidemic" to institutional investors, venture capitalists and private equity. The presenters talked about obesity in the United States and other countries, the outlook for the next 10 to 20 years, and steps that need to be taken to combat it.

"We had leading doctors and experts on the panel to discuss how big the problem is. What we have to do, and what are the impacts on the economy and health care costs. It's an educational forum," said Mark Rupe, an Adams Harkness analyst who helped organize the events and covers health and fitness stocks.

In Boston, invited companies, which included Cybex, Herbalife Ltd., Inamed and Synovis Life Technologies, met with investors after the panel in breakout sessions to discuss their companies' role in combating obesity and answer investor questions. Inamed and Synovis Life both produce products for gastric bypass surgery.

Cybex CEO John Aglialoro and CFO Arthur Hicks were on-hand to answer questions that ranged from target markets, its products and how it sells to the market, to its balance sheet, margins and bottom line profit.

"Some of the questions that the management team heard were very straightforward, but also very strategic," said Roland Murray, Cybex's vice president of marketing who also attended the event. "The breakout session after the presenters were done was the most valuable for us. At one point we had eight to nine investors at our table asking questions, how we're positioning ourselves and how we're marketing ourselves."
Murray added, "What Adams Harkness is doing is trying to create legitimately another segment in health care, and they are branching out to include fitness as a segment under that umbrella."

Adams Harkness' goal in arranging the panels and Q&As is to give investors a jump on the next hot stocks. Its website even says: "When you know an industry inside and out, you can spot the trends and influences that make or break new businesses."

"We try to focus on themes the earlier the better and try to get people up to speed before everybody else sees it," Rupe said. "The informed investor may be a leg up and see the trend a little bit sooner and be able to invest in that area before everybody else."

Rupe admitted that, from the investment point of view, the quick money is fad diets and the next hot thing. "Sometimes these stocks move on one-hit-wonder drugs. A lot of the investors want to hear more about the surgeries and the high priced stuff, not the good old 'you know it works, but you have to put a lot of time into' exercise. People more and more see that eating, sleeping and exercising are three parts of a triangle that keep the weight off and maintain a decent weight. So maybe they'll come around."

Ron Arp of Nautilus, which participated in the first Adams Harkness obesity panel discussion in Philadelphia, said, "The fitness industry needs to reach out to more people around the world, making it easy for them to adopt a lifelong pattern of fitness and health. Once people become morbidly obese, their remedies become far more drastic and expensive to society, employers and themselves."



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