Artisan Partners, an investment management company, released its “Artisan Value Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. US stocks recovered from brief periods of volatility to hit fresh all-time highs in Q3 due to incoming economic data supporting a soft landing, US inflation continuing to slow, and positive underlying profit growth. Against this backdrop, the portfolio generated a solid absolute return but trailed the Russell 1000® Value Index. Due to the absence of real estate and utility holdings, the switch to bond proxies was a performance headwind. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 6.65%, 6.69%, and 6.69% respectively, in the third quarter compared to a 9.43% return for the Russell 1000 Value Index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2024.
Artisan Value Fund highlighted stocks like Humana Inc. (NYSE:HUM), in the third quarter 2024 investor letter. Humana Inc. (NYSE:HUM) offers medical and specialty insurance products. The one-month return of Humana Inc. (NYSE:HUM) was 8.67%, and its shares lost 43.57% of their value over the last 52 weeks. On November 13, 2024, Humana Inc. (NYSE:HUM) stock closed at $289.42 per share with a market capitalization of $34.849 billion.
Artisan Value Fund stated the following regarding Humana Inc. (NYSE:HUM) in its Q3 2024 investor letter:
“Our biggest decliners were Dollar General, Humana Inc. (NYSE:HUM) and Samsung Electronics. Humana is a leading US managed health care company that we added to the portfolio earlier this year. After a few years of benign costs, mainly related to lower utilization trends during COVID in which the managed care industry enjoyed expanding profits and strong growth, utilization has ticked higher, driving up costs. Due to the timing of annual negotiated repricing for Medicare Advantage (MA) plans, Humana is unable to adjust pricing higher until the following year. In the interim, this is problematic for earnings. Naturally, this has weighed on Humana’s stock price. In the latest quarter, revenues were up 10%, but profits were restrained due to higher utilization. This was mostly anticipated, but given the limited visibility into pricing for the upcoming year, investors remain on edge. Further negative news for Humana came in early October when the company announced that preliminary data provided by the Centers for Medicare & Medicaid Services (CMS) showed that the percentage of Humana’s members enrolled in higher quality MA plans had fallen, which would impact government bonus payments. Humana is working with CMS to appeal the process as the company believes there were potential errors; however, this introduces risk to 2026 and 2027 margin targets. The stock was down about 15% in Q3 and fell another 8% through mid-October after the news regarding the CMS ratings. As opportunistic value investors, we are taking advantage of further weakness to add to our position at cheap prices. Like the market, we appreciate Humana’s current challenges, but we believe the longer term drivers for the business remain intact.”
A closeup of an elderly patient happily receiving a specialty healthcare product.
Humana Inc. (NYSE:HUM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held Humana Inc. (NYSE:HUM) at the end of the second quarter which was 74 in the previous quarter. While we acknowledge the potential of Humana Inc. (NYSE: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Humana Inc. (NYSE:HUM) and shared the list of oversold blue-chip stocks to buy. Artisan Value Fund initiated a position in Humana Inc. (NYSE:HUM) in Q1 2024, due to its strong long-term fundamentals. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.