Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The Russell Midcap® Value Index ended Q4 somewhat lower, down -1.75%, after posting robust gains in Q3. The index provided a 13.07% return for the year. Following the US election, mid-cap value stocks experienced a significant rally with the larger US equity market, hitting all-time highs before declining in December. In the quarter, the fund’s Investor Class fund ARTQX returned -3.70%, Advisor Class fund APDQX posted a return of -3.67%, and Institutional Class fund APHQX returned -3.67%, compared to a -1.75% return for the Russell Midcap Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Artisan Mid Cap Value Fund emphasized stocks such as Humana Inc. (NYSE:HUM). Humana Inc. (NYSE:HUM) offers medical and specialty insurance products. The one-month return of Humana Inc. (NYSE:HUM) was -1.49%, and its shares lost 28.60% of their value over the last 52 weeks. On March 12, 2025, Humana Inc. (NYSE:HUM) stock closed at $249.11 per share with a market capitalization of $30.07 billion.
Artisan Mid Cap Value Fund stated the following regarding Humana Inc. (NYSE:HUM) in its Q4 2024 investor letter:
“We were fairly active in Q4, adding four stocks to the portfolio. Our largest new purchase was Humana Inc. (NYSE:HUM), a leading US managed healthcare company. After a few years of benign costs, mainly related to lower utilization trends during COVID in which the managed care industry enjoyed expanding profits and strong growth, utilization has ticked higher, driving up costs. Due to the timing of annual negotiated repricing for Medicare Advantage (MA) plans, Humana is unable to adjust pricing higher until 2025. In the interim, this is problematic for earnings. Naturally, this has weighed on Humana’s stock price. In the latest quarter, revenues were up 10%, but profits were restrained due to higher utilization. This was mostly anticipated, but given the limited visibility into pricing for the upcoming year, investors remain on edge. Further negative news for Humana came in early October when the company announced that preliminary data provided by the Centers for Medicare & Medicaid Services (CMS) showed that the percentage of Humana’s members enrolled in higher quality MA plans had fallen, which would impact government bonus payments. Humana is working with CMS to appeal the process as the company believes there were potential errors; however, this introduces risk to 2026 and2027margintargets. The stock was downabout15%inQ3 and fell another 8% through mid-October after the news regarding the CMS ratings around the time of our initial purchase. Like the market, we appreciate Humana’s current challenges, but we believe the longer term drivers for the business remain intact.”
A closeup of an elderly patient happily receiving a specialty healthcare product.
Humana Inc. (NYSE:HUM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Humana Inc. (NYSE:HUM) at the end of the fourth quarter which was 60 in the previous quarter. While we acknowledge the potential of Humana Inc. (NYSE:HUM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Humana Inc. (NYSE:HUM) and shared the list of health insurance stocks to buy. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.