Top 5 Stocks to Invest in According to John Smith Clark’s Southpoint Capital Advisors

4. Centene Corporation (NYSE: CNC)

Southpoint Capital Advisors’ Stake Value: $255 million

Percentage of Southpoint Capital Advisors’ 13F Portfolio: 4.42%

Number of Hedge Fund Holders: 49

Formed in 1984 and spearheaded in St. Louis, Missouri, Centene Corporation (NYSE: CNC) sits at the 4th position on our list of top stocks to invest in according to John Smith Clark’s Southpoint Capital Advisors.

By the second quarter, 49 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in the company worth $3.2 billion compared to the 53 hedge funds staking $2.7 billion in the previous quarter.

In the Q3 2020 Investor Letter, FPA Capital Fund highlighted a few stocks and Centene Corp (NYSE:CNC) is one of them. Centene Corp (NYSE:CNC) is an insurance company. Here is what FPA Capital Fund said:

“CNC was the Fund’s 2 nd worst performer for the quarter. The company is a managed care organization (discussed in more detail in prior commentaries). The stock declined on election uncertainty and on the increased likelihood that the Supreme Court might strike down the Affordable Care Act due to the death of Supreme Court Justice Ginsburg. CNC does have the headline risk, but the stock is trading at 10x 2021 price to earnings multiple versus its long term historical average of 16x. 6 Its COVID-19 costs appear to be in line with expectations and the worst long term effect from a repeal of the Affordable Care Act is estimated to be a 10% hit to earnings. 7 We believe that any likely political scenarios would not cause a major longterm disruption to the company while its valuation appears to price in a much more dire scenario.”