HCA Healthcare Inc. is Still Cheap Today, Says Bireme Capital

Bireme Capital, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 47.1% was recorded by the fund for the year end 2020, outperforming its S&P500 benchmark that delivered an 18.3% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Bireme Capital, in their Q4 2020 investor letter, said that HCA Healthcare, Inc. (NYSE: HCA)’s stock price is still cheap today. Bireme Capital identifies HCA Healthcare, Inc. as one of the companies at the other side of the value spread, the other end of the “barbell market”. HCA Healthcare, Inc. is a health care company based in Nashville, Tennessee.  It currently has a $61.6 billion market capitalization. Since the beginning of the year, HCA delivered a 10.04% return, extending its 12-month gains to 42.82%. As of March 4, the stock closed at $176.34 per share.

Here is what Bireme Capital has to say about HCA Healthcare, Inc. in their Q4 2020 investor letter:

“Since March we have increasingly tilted the long book towards stocks whose businesses will improve as the pandemic fades, a strategy we first discussed in our 1Q20 letter. Now that 2020 is — thankfully — over, let’s take a look back at some of our predictions from Q1.

HCA Healthcare (HCA) runs for-profit hospitals. In Q1, we said:

“We were shocked to see HCA initially trade down more than 50% in mid-March, in line with hotel companies and online travel agents. HCA will likely earn $11-12 in EPS when the COVID-19 crisis recedes, and we think the stock will trade back towards $150. Therefore, during Q1 we added we added ~80% to our shareholdings at an average price of roughly $90.”

If anything, this prediction was pessimistic. Despite the raging pandemic, 2020 revenue of $51.5b was actually up year-over-year. Earnings increased as well, with 2020 EPS of $10.93 and guidance of $12.10-13.10 in EPS for 2021. Said another way, in March HCA was trading for about 5 times 2021 earnings. We think that at $175 this stock is still cheap today and should trade at well over $200 per share.”


In January 2021, we published an article about Oakmark Select Fund’s HCA Healthcare, Inc. (NYSE: HCA) investment thesis. HCA delivered a 15.39% return in the past 3 months.

Our calculations show that HCA Healthcare, Inc. (NYSE: HCA) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, HCA Healthcare, Inc. was in 73 hedge fund portfolios, compared to 71 funds in the third quarter.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.