4. Anthem, Inc. (NYSE:ANTM)
Number of Hedge Fund Holders: 59
Anthem, Inc. (NYSE:ANTM) offers health insurance in the United States and is the largest managed healthcare company in the Blue Cross Blue Shield Association. In Q3 2021, 59 hedge funds were bullish on Anthem, Inc. (NYSE:ANTM), with stakes totaling $4.5 billion. Eagle Capital Management held more than 2.5 million shares of Anthem, Inc. (NYSE:ANTM) as of September 2021, worth 949.4 million, making it the leading company stakeholder.
Anthem, Inc. (NYSE:ANTM) published on January 26 its Q4 results. The company posted earnings per share of $5.14, beating estimates by $0.02. Revenue for the period came in at $36.02 billion, up 14.22% year-on-year, but missed estimates by $436.76 million.
On February 7, Argus analyst Jasper Hellweg raised the price target on Anthem, Inc. (NYSE:ANTM) to $500 from $475 and kept a Buy rating on the shares. The company continues to benefit from rising enrollments in its government segment, rate increases, and the expansion of its in-house pharmacy benefit manager, and the shares are also “attractively valued”, according to the analyst.
Here is what Nomadic Value Partners has to say about Anthem, Inc. (NYSE:ANTM) in their Q4 2020 investor letter:
“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year antitrust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”
The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to supercharge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”
