FPA Capital Fund recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 1.26% for the quarter, underperforming its benchmark, the Russell 2500 Index which returned 5.88% in the same quarter. You should check out FPA Capital Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, FPA Capital Fund highlighted a few stocks and Centene Corp (NYSE:CNC) is one of them. Centene Corp (NYSE:CNC) is an insurance company. In the last one year, Centene Corp (NYSE:CNC) stock gained 5.1% and on January 6th it had a closing price of $67.66. Here is what FPA Capital Fund said:
“CNC was the Fund’s 2 nd worst performer for the quarter. The company is a managed care organization (discussed in more detail in prior commentaries). The stock declined on election uncertainty and on the increased likelihood that the Supreme Court might strike down the Affordable Care Act due to the death of Supreme Court Justice Ginsburg. CNC does have the headline risk, but the stock is trading at 10x 2021 price to earnings multiple versus its long term historical average of 16x. 6 Its COVID-19 costs appear to be in line with expectations and the worst long term effect from a repeal of the Affordable Care Act is estimated to be a 10% hit to earnings. 7 We believe that any likely political scenarios would not cause a major longterm disruption to the company while its valuation appears to price in a much more dire scenario.”
In Q3 2020, the number of bullish hedge fund positions on Centene Corp (NYSE:CNC) stock decreased by about 18% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Centene’s growth potential. Our calculations showed that Centene Corp (NYSE:CNC) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.