Third Point Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio return of +12.5% was delivered by the flagship Offshore Fund, bringing year-to-date returns to +29.5%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Third Point Management, in its Q3 2021 investor letter, mentioned UnitedHealth Group Incorporated (NYSE: UNH) and discussed its stance on the firm. UnitedHealth Group Incorporated is a Minnetonka, Minnesota-based insurance company with a $428.1 billion market capitalization. UNH delivered a 29.49% return since the beginning of the year, while its 12-month returns are up by 45.50%. The stock closed at $454.11 per share on October 29, 2021.
Here is what Third Point Management has to say about UnitedHealth Group Incorporated in its Q3 2021 investor letter:
“UnitedHealth is one of the largest healthcare companies in the world and a market leader in both its insurance and healthcare services (Optum) businesses. We initiated our position during the 2020 Presidential election at a time of heightened political and regulatory uncertainty.
We believe under its new CEO, Andrew Witty, UnitedHealth can not only preserve its market dominance and sustain industry-leading growth rates across most of its key segments but also enter new healthcare services markets. Witty is known as a mission-driven CEO who clearly articulates his view that providing high-quality, affordable health care services is a social good. He receives consistently high marks from former colleagues, and we believe that his leadership approach will ballast and even strengthen UNH’s already impressive management and employee ranks. The insurance and services businesses are synergistic and complementary, which entrenches United’s critical role in care financing, access, and management. This dynamic gives us confidence in the durability of United’s market leadership…” (Click here to see the full text)
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Based on our calculations, UnitedHealth Group Incorporated (NYSE: UNH) ranks 17th in our list of the 30 Most Popular Stocks Among Hedge Funds. UNH was in 105 hedge fund portfolios at the end of the first half of 2021, compared to 89 funds in the previous quarter. UnitedHealth Group Incorporated (NYSE: UNH) delivered a 9.27% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
