PGIM Jennison Health Sciences Fund recently released its third quarter 2024 investor letter. A copy of the letter can be downloaded here. Given concerns regarding the decreasing pace of U.S. employment and the associated concerns that U.S. interest rates may have been maintained at levels higher than necessary to moderate the pace of inflation, U.S. equity markets fluctuated during the summer and partially reversed their year-to-date gains. The S&P 1500 Health Care Index appreciated 6.1% in the third quarter, outperforming the S&P 500, which gained 5.9%. While the fund advanced in the quarter, it underperformed the index. Stock selection within medtech and pharmaceuticals contributed to the most value. Relative performance was negatively impacted by security selection in biotechnology and health care providers and services, as well as underweights in life sciences tools and services. In addition, please check the fund’s top five holdings to know its best picks in 2024.
PGIM Jennison Health Sciences 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 -1.74%, and its shares lost 40.69% of their value over the last 52 weeks. On December 11, 2024, Humana Inc. (NYSE:HUM) stock closed at $278.20 per share with a market capitalization of $33.5 billion.
PGIM Jennison Health Sciences Fund stated the following regarding Humana Inc. (NYSE:HUM) in its Q3 2024 investor letter:
“Humana Inc. (NYSE:HUM) is one of the largest providers of Medicare Advantage (MA) plans, the fastest-growing segment of the U.S. health care insurance market. We believe the company is poised to benefit from the increased use of private Medicare plans, in part, because of the aging of the population. The company’s strategy is to reduce costs and improve care for seniors. The stock has been volatile as they recently cut earnings and margin guidance due to higher-than-expected medical costs. We re-entered the stock after this cut based on our view that owning health insurers when they hit trough margins is an attractive investment case. Since the margin and earnings guidance cut, there are now new concerns regarding the company’s quality scores and payments – these are payments by the government based on how the company’s plans score for serving patients. We were surprised at the magnitude of the deterioration in quality, especially after a large investment in quality over the last decade. The updated scores are being appealed, but we continue to be concerned regarding management quality and execution. We plan on re-visiting our thesis once more information is gleaned about the company’s intermediate-term margins.”
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, 60 hedge fund portfolios held Humana Inc. (NYSE:HUM) at the end of the third quarter which was 71 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 worst performing healthcare stocks in 2024. Humana Inc. (NYSE:HUM) detracted from the performance of Artisan Value Fund in Q3 2024. 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.