RiverPark Funds, an investment management firm, published its “RiverPark Large Growth Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. The RiverPark Large Growth Fund (the “Fund”) returned 2.5% for the first quarter, while its benchmarks, the S&P 500 Total Return Index (“S&P”) advanced 6.2%, the Russell 1000 Growth Total Return Index (“RLG”) returned 0.9%. In contrast, the Russell 1000 Value Total Return Index returned 11.2%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
RiverPark Large Growth Fund, in their Q1 2021 investor letter, mentioned UnitedHealth Group Incorporated (NYSE: UNH) and shared their insights on the company. UnitedHealth Group Incorporated is a Minnetonka, Minnesota-based managed health care company that currently has a $368.5 billion market capitalization. Since the beginning of the year, UNH delivered an 11.17% return, extending its 12-month gains to 42.18%. As of April 19, 2021, the stock closed at $389.84 per share.
Here is what RiverPark Large Growth Fund has to say about UnitedHealth Group Incorporated in their Q1 2021 investor letter:
“We re-established a position in UnitedHealth Group during the quarter. The company occupies a unique position within the U.S. healthcare system with several at-scale and interconnected businesses. UnitedHealth has (a) a dominant managed care organization (MCO) in commercial, Medicare and Medicaid markets, (b) a large and growing presence in local care delivery (OptumHealth’s physicians and ambulatory service centers), (c) one of only three at-scale pharmacy benefits managers (OptumRx’s PBM) and (d) a fast-growing healthcare-information technology (HCIT), consulting and revenue cycle management (RCM) business (OptumInsight).
While the combination of the businesses provides UNH advantages, the individual segments have key differentiators as well. UnitedHealth has scale in Medicare Advantage and Medicaid, the two fastest growing product lines in managed care. With the high costs of U.S. healthcare an increasing priority, MCO’s like UnitedHealth are in strong positions to pressure vendors and healthcare providers. The company’s OptumHealth division has the advantage of being a healthcare provider working with, instead of against, its payer. OptumRx (the largest piece of UNH’s service businesses) is one of the three major PBMs and we expect the dominant PBMs to take share from the smaller players. OptumRx should take additional share as UNH recaptures the 60%-80% of its self-insured employer clients from competitor PBMs. Finally, the higher-margin OptumInsight business is well positioned to address the growing needs of four primary market segments: healthcare providers, health plans, governments, and life science companies, all of which have increasing data, technology, and revenue management needs.
The combination of the largest MCO (UnitedHealth) with the faster-growing, higher-margin Optum services businesses positions the company to capture future growth in the U.S. healthcare industry. We expect balanced growth from both health insurance and health services leading to consistent high-single-digit revenue growth for the company. With margin expansion from scale, share buybacks from its strong cash generating ability (the company currently has $20 billion cash), and continued strategic acquisitions, we believe the company can generate double-digit earnings growth for the foreseeable future.”
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Our calculations show that UnitedHealth Group Incorporated (NYSE: UNH) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, UnitedHealth Group Incorporated was in 91 hedge fund portfolios, compared to 89 funds in the third quarter. UNH delivered a 10.69% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
