Nomadic Value Partners, a research and portfolio management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. In the letter, they talked about how the US equity market is undeniably overvalued, and is most probably in a ‘bubble’ territory. The fund also emphasized their ‘Nomadic’ approach, which they defined as a “thesis-driven investing”, that looks for positive, multi-year change within industries and also seek ways to competitively take market share and ultimately profit from it. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.
Nomadic Value Partners, in their Q4 2020 Investor Letter said that they became less optimistic so they sold their position in Anthem, Inc. (NYSE: ANTM), because accordingly, the company is behind integration. Anthem, Inc. is an insurance company that currently has a $78 billion market cap. For the past 3 months, EQC delivered a 4.73% return and settled at $314.09 per share at the closing of January 22nd.
Here is what Nomadic Value Partners has to say about Anthem, Inc. in their Investor Letter:
“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year anti-trust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”
The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to super charge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”
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Last November 2020, we published an article telling that Anthem, Inc. (NYSE: ANTM) was in 65 hedge fund portfolios. Its all time high statistics is 73. ANTM delivered a 10.58% return in the past 12 months.
Our calculations showed that Anthem, Inc. (NYSE: ANTM) does not belong to the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.
