We recently published a list of the 10 Worst Performing Stocks in S&P 500 in 2024. In this article, we are going to take a look at where Humana Inc. (NYSE:HUM) stands against other worst performing S&P 500 stocks in 2024.
Since 2023, the market has experienced extended winning streaks, reflecting the economy’s resilience. The most recent rally stretched six consecutive weeks but finally came to an end between October 21 and 25, marking the first week in six to close with a loss.
Nevertheless, the tech sector still closed with small gains as it was led by Tesla after its strong earnings. Despite that, now some experts in the market are trying to broaden their investments as they see uncertainty in the coming months, mainly due to the election and geopolitical reasons.
READ ALSO: 10 Best-Performing S&P 500 Stocks in the Last 3 Years and 10 Worst Performing Dow Stocks Year-to-Date.
A New Investment Approach Favoring Value Over Tech in Uncertain Times
James Cakmak, Chief Investment Officer at Clockwise Capital, detailed his recent shift from the tech-heavy Mag7 stocks into more diverse, value-focused sectors. Initially long on tech, Cakmak’s strategy changed due to heightened risks related to the election, geopolitical tensions, and economic cycles. While tech had seen significant growth, he felt it was essential to seek other opportunities for “alpha” as the market evolved.
Cakmak explained that Clockwise Capital has moved funds into undervalued sectors, such as automotive and metals, as well as smaller, less mainstream software companies.
Addressing inflation, Cakmak stressed the importance of keeping metals as a hedge. With inflation still showing signs of persistence and the Fed adjusting its rate cut expectations, he sees value in maintaining assets that traditionally perform well during inflationary periods, including gold.
Finally, he highlighted his commitment to semiconductors as a long-term investment theme, acknowledging their volatility but affirming their relevance in driving automation and productivity.
If we talk about other opportunities in the market, Goldman Sachs is bullish on undervalued quality growth stocks and cyclical value stocks as discussed by Christian Mueller-Glissmann from Goldman in a CNBC interview. We talked about it in our article: 12 Most Profitable Growth Stocks To Invest In. Here is an excerpt from it:
“Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.
His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes.”
Our Methodology
For this article, we checked the performance of the S&P 500 stocks and picked out the 10 stocks with the highest share price decline, as of October 24. The stocks are listed in descending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 71
Year-to-Date Share Price Performance: -45%
Humana Inc. (NYSE:HUM) provides medical and specialty insurance products in the U.S. through two segments: Insurance and CenterWell. It offers medical and supplemental benefit plans, manages the Limited Income Newly Eligible Transition prescription drug plan, and partners with states for Medicaid and long-term support services.
The company also provides commercial health insurance, including dental and vision coverage, along with military services and pharmacy benefit management. It operates pharmacies and primary care centers, as well as home health services.
Humana (NYSE:HUM) started the year in red and was down over 20% by the second quarter. However, it fell significantly after the second quarter despite beating the Wall Street estimates. At the quarter’s earnings call, CEO James Rechtin acknowledged ongoing external challenges but maintained that the company’s fundamentals remain strong.
The company exceeded expectations, yet faced medical cost pressures, especially due to higher-than-expected inpatient admissions. The Medicare segment performed well, with an increased forecast of 75,000 additional members, representing a 4% annual growth. However, rising inpatient costs created significant pressure, which is expected to continue.
Rechtin also noted advancements in managing administrative costs, automation efforts, and partnerships aimed at improving efficiency and consumer experiences. Despite the difficulties, he remains confident in the company’s long-term outlook and reaffirmed guidance for adjusted EPS and benefit ratios for 2024, while expecting continued pressure from high inpatient costs into 2025.
In summary, while there are positive developments, the company faces significant operational challenges.
Overall, HUM ranks 5th on our list of worst performing stocks in the S&P 500. While we acknowledge the potential of 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 more promising than HUM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
