Vltava Fund, an investment management firm, published its third-quarter 2022 investor letter – a copy of which can be downloaded here. In its Q3 2022 investor letter, the fund mentioned that investors may have different expectations concerning inflation, interest rates, or economic growth, but, at the end of the day, what we buy will determine the portfolio’s return (and its risk). The fund also said that the need for capital investment over the long term has been, and will likely remain, higher than it anticipated. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, Vltava Fund mentioned CVS Health Corporation (NYSE:CVS) and explained its insights for the company. Founded in 1963, CVS Health Corporation (NYSE:CVS) is a Woonsocket, Rhode Island-based healthcare company with a $115.8 billion market capitalization. CVS Health Corporation (NYSE:CVS) delivered a -14.45% return since the beginning of the year, while its 12-month returns are up by 4.71%. The stock closed at $88.25 per share on October 10, 2022.
Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
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Our calculations show that CVS Health Corporation (NYSE:CVS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. CVS Health Corporation (NYSE:CVS) was in 65 hedge fund portfolios at the end of the second quarter of 2022, compared to 72 funds in the previous quarter. CVS Health Corporation (NYSE:CVS) delivered a -6.82% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on CVS Health Corporation (NYSE:CVS) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
