Polen Capital, an investment management company, released its “Polen Global Growth Strategy” first-quarter 2023 investor letter. A copy of the same can be downloaded here. The fund returned 11.37% net in the first quarter compared to a return of 7.31% for the MSCI ACW Index. Global equity markets were volatile in the first quarter. The market rewarded quality fundamentals in January, and fear of inflation and central bank policy reemerged in February. However, despite the banking crisis, quality fundamentals were rewarded again in March. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Polen Global Growth Strategy highlighted stocks like Abbott Laboratories (NYSE:ABT) in the first quarter 2023 investor letter. Headquartered in North Chicago, Illinois, Abbott Laboratories (NYSE:ABT) is a healthcare products manufacturer. On April 24, 2023, Abbott Laboratories (NYSE:ABT) stock closed at $110.40 per share. One-month return of Abbott Laboratories (NYSE:ABT) was 13.69%, and its shares lost 5.62% of their value over the last 52 weeks. Abbott Laboratories (NYSE:ABT) has a market capitalization of $191.87 billion.
Polen Global Growth Strategy made the following comment about Abbott Laboratories (NYSE:ABT) in its Q1 2023 investor letter:
“As stated below in the portfolio activity section, Abbott Laboratories (NYSE:ABT) is expected to see roughly $6 billion in COVID test sales evaporate this year, creating a headwind for margins and underlying earnings per share. As long-term owners of the business, these test sales were never part of our original investment case. The core business, our primary focus, has a clear path of growing high single digits in 2023 with durable growth beyond, in our view. We believe the current price of 23x NTM P/E , while reasonable, is also misleading considering earnings this year will be artificially depressed because of the drop in COVID testing sales. On normalized earnings, the price is lower. We anticipate underlying EPS growth of at least low-teens over the next three to five years.
Lastly, we trimmed Abbott Laboratories, bringing it back to a more average position size and to also fund our increase in Thermo Fisher. Abbott is entering a year in which the company is expected to see approximately $6bn in COVID-19 test sales disappear, thus, creating a headwind for margins and EPS. That said, the core business has a clear path to growing high single digits in FY23. EPS grew at a 20% CAGR from 2019-2022, far beyond our expectations when we initiated our investment. Now, we expect a more normal growth rate of low teens EPS beyond this year. Further, management’s adeptness at allocating capital continues to impress us. We expect Abbott to drive top line growth without heavily investing in R&D and SG&A this year— management effectively “front-loaded” those investments in 2021 and 2022 when COVID test sales created a bolus of cash. We believe this should allow for leverage on the operating margin going forward. Combined, Abbott and Thermo Fisher now represent 7% of the Portfolio.”
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Abbott Laboratories (NYSE:ABT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Abbott Laboratories (NYSE:ABT) at the end of the fourth quarter which was 62 in the previous quarter.
We discussed Abbott Laboratories (NYSE:ABT) in another article and shared the list of best medical stocks to invest in. In addition, please check out our hedge fund investor letters Q1 2023 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.
