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Billionaire Eric Sprott Betting on Healthcare; Apple Inc. (AAPL) Among Top Holdings

Sprott Asset Management is a Toronto-based alternative asset manager founded by billionaire Eric Sprott, a widely-knowninvestor usually  bullish on the resource sector, particularly precious metals. Although Mr. Sprott is no longer involved in the day-to-day portfolio management operations at Sprott Asset Management, his investment firm continues to believe in the long-term prospects of precious metals to some extent. Just recently, the Toronto-based firm submitted its quarterly 13F for the first quarter, so this article will discuss several noteworthy non-resource related moves implemented by the firm during the first three months of this year. Sprott’s equity portfolio was valued at $1.27 billion at the end of March, as compared to $2.65 billion registered a quarter earlier. However, this does not necessarily imply that the fund had a terrible performance in the first three months of 2016, as it implemented a thorough rebalancing process during the period.

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#5. CGI Group Inc. (NYSE:GIB)

– Number of shares held by Sprott as of March 31: 811,550

– Value of Sprott’s holding as of March 31: $38.78 Million

CGI Group Inc. (NYSE:GIB) represents the fifth-largest equity holing in Sprott Asset Management’s equity portfolio as of the end of March, consisting of 811,550 shares valued at $38.78 million. The Toronto-based alternative asset manager held its stake in CGI Group unchanged during the first three months of this year. The Montreal-based information technology (IT) and business process services (BPS) firm has seen its shares advance by 21% since the beginning of 2016. The company has been deploying more capital towards developing cybersecurity services, which may drive both bottom- and top-line growth in the upcoming years considering the growth in cybersecurity threats. CGI Group’s revenue for fiscal 2015 that ended September 2015 was $10.29 billion, which decreased $212.6 million year-on-year. While most U.S. multinational companies have been impacted by the stronger green buck in recent years, the Montreal-based firm’s revenue was positively impacted by foreign currency fluctuations, with the positive impact reaching $211.7 million. CGI Group’s stock trades only 13.0-times expected earnings, below the forward PE multiple of 16.3 for the Information Technology sector. Cliff Asness’ AQR Capital Management held 940,643 shares of CGI Group Inc. (NYSE:GIB) in its equity portfolio at the end of December.

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#4. CVS Health Corp (NYSE:CVS)

– Number of shares held by Sprott as of March 31: 402,000

– Value of Sprott’s holding as of March 31: $41.70 Million

The investment firm that carries the name of billionaire Eric Sprott increased its stake in CVS Health Corp (NYSE:CVS) by 11,200 shares during the March quarter to 402,000 shares, which were valued at $41.70 million at quarter-end. It should be noted though that Sprott also acquired a new block of 387,900 shares underlying ‘Put’ options during the same quarter. The integrated pharmacy health care company’s market value gained 4% year-to-date, which currently stands at around $112 billion. In mid-March, analysts at Credit Suisse initiated coverage on CVS Health with an ‘Outperform’ rating and a price target of $115, saying that the Rhode Island-based company will benefit from the acquisition of Omnicare in August 2015. In December, CVS also completed the acquisition of the pharmacy and clinic businesses of Target Corporation (NYSE:TGT), which involved the purchase of 1,672 pharmacies across 47 states. CVS Health pays out a quarterly dividend of $0.425 per share, which equates to a dividend yield of 1.67%. Ken Fisher’s Fisher Asset Management upped its position in CVS Health Corp (NYSE:CVS) by 17% during the January-March quarter to 142,324 shares.

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#3. UnitedHealth Group Inc. (NYSE:UNH)

– Number of shares held by Sprott as of March 31: 371,830

– Value of Sprott’s holding as of March 31: $47.93 Million

Sprott Asset Management was mildly bullish on UnitedHealth Group Inc. (NYSE:UNH) during the first quarter of 2016, as the firm increased its stake in the company by 24,600 shares or 7% quarter-on-quarter. As in the case of CVS, the Toronto-based asset manager purchased put options on 362,500 shares of UnitedHealth during the first three months of this year. During its recent earnings call, the U.S. biggest health insurer announced plans to stop participating in multi-carrier health insurance marketplaces for individuals through exchanges, saying that the exchange market established by the Affordable Care Act has been risker than previously expected and that the company “cannot broadly serve it on an effective and sustained basis”. However, analysts believe that overall impact of UnitedHealth’s decision is not likely to be overly significant on the so-called Obamacare, even though individual markets in certain states may experience less competition. UnitedHealth’s shares are 13% in the green year-to-date. Boykin Curry’s Eagle Capital Management owned 7.90 million shares of UnitedHealth Group Inc. (NYSE:UNH) at the end of the December quarter.

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#2. Apple Inc. (NASDAQ:AAPL)

– Number of shares held by Sprott as of March 31: 445,955

– Value of Sprott’s holding as of March 31: $48.61 Million

Mr. Sprott’s investment firm reduced its exposure to Apple Inc. (NASDAQ:AAPL) by 13,290 shares during the first quarter of 2016, ending the three-month period with 445,955 shares valued at $48.61 million. Sprott also acquired ‘Put’ options with respect to 355,500 Apple shares during the quarter. The iPhone maker will release its second-quarter earnings report on April 26, a day later than previously scheduled, as revealed on the company’s website. The earnings announcement has been rescheduled due to a memorial service for Silicon Valley’s beloved Bill Campbell. The much-awaited earnings report will be particularly interesting for the investment community considering that Apple recently revealed the iPhone SE, which is expected to add approximately $6.8 billion to the company’s top-line figure for the current calendar year. The earnings report will also shed some light on Apple’s services businesses, which are expected to account for 29% of the company’s gross profit by the end of 2020, versus the current portion of only 15%. Apple shares are 1% in the green thus far in 2016, but they have declined 18% in the past 12 months. Charles Paquelet’s Skylands Capital reported ownership of 349,365 shares of Apple Inc. (NASDAQ:AAPL) through the latest round of 13Fs.

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#1. Medtronic PLC (NYSE:MDT)

– Number of shares held by Sprott as of March 31: 727,900

– Value of Sprott’s holding as of March 31: $54.59 Million

Toronto-based Sprott Asset Management acquired a new stake of 727,900 shares of Medtronic PLC (NYSE:MDT) during the first three months of this year, which were aggregately worth $54.59 million on March 31. This was the largest equity holding of Sprott at the end of March, accounting for 4.28% of the fund’s equity portfolio. Similarly, the investment firm also purchased put options on 435,400 shares, which were most probably purchased to protect the investment firm from a possible downturn in equity markets. The Ireland-based medical device maker, which completed an inversion move by acquiring Covidien for a total consideration of $50 billion in early 2015, has seen its shares gain 2% year-to-date. Despite benefiting from a lower tax rate of only 12.5% and implementing cost cutting efforts in connection with the inversion deal, the shares of Medtronic have not performed quite well since the completion of the deal. The company plans to achieve at least $850 million in annual pre-tax cost savings by the end 2018. Barry Dargan’s Intermede Investment Partners owns 483,089 shares of Medtronic PLC (NYSE:MDT) as of the end of the March quarter.

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Disclosure: None