We recently published a list of the 10 Best Stock Picks of Billionaire Leon Cooperman in 2024. Since Elevance Health, Inc. (NYSE:ELV) ranks 4th on the list, it deserves a deeper look.
Billionaire Leon Cooperman predicted in April that the US is headed for a financial crisis. Cooperman said that the Federal Reserve kept interest rates near zero, but raised them dramatically in a period of 12 months. The Omega Family Office chairman and CEO expects “one or two” rate cuts this year. He emphasized that the market remains overvalued.
In February last year, the billionaire said that the market was headed for a recession, and noted that the S&P 500 high of about 4,800 recorded in 2022 could “stand for some time.” In July 2022, while talking to Bloomberg, Cooperman said that he was “shocked” that interest rates were so low.
“I am of the view that equities are the best house in the financial asset in the neighborhood, but I don’t like the neighborhood, for a lot of reasons.”
Cooperman in the Bloomberg interview in 2022 had categorically said that sooner or later the strong dollar, prices of oil and the Fed would “lead us into a recession.” He went on to add that recession would be a “2023 event” and predicted that the market would bottom somewhere near 35% to 45% below its peak of 4800.
The billionaire had said that he would be “very surprised” if we were to see another bull market anytime soon, given his view that we’ve had one of the biggest bull runs driven by FAANG, SPACs and speculation. The AI revolution that started in 2023 was indeed a shocker for Cooperman as his recession predictions were proven wrong.
For this article we scanned billionaire Leon Cooperman’s Q1 portfolio and picked 10 stocks with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Elevance Health, Inc. (NYSE:ELV)
Number of Hedge Fund Holders: 83
Insurance company Elevance Health, Inc. (NYSE:ELV) is one of the best stocks in Leon Cooperman’s 2024 portfolio based on hedge fund sentiment. Insider Monkey’s database of 933 hedge funds shows that 83 funds had stakes in Elevance Health, Inc. (NYSE:ELV) as of the end of 2023. Leon Cooperman’s Omega Advisors reported having a $67.4 million stake in Elevance Health, Inc. (NYSE:ELV).
While Elevance Health, Inc. (NYSE:ELV) is operating in a mature industry, its expansion into new growth areas makes the stock promising. For example, Elevance Health, Inc. (NYSE:ELV) is foraying into office-based physicians, virtual healthcare, etc. Analysts are bullish on the company’s Managed Care business amid new growth catalysts. The company’s vertically integrated health business Carelon Health will partner with PE firm CD&R, Apree Health (a physician services provider) and Millennium Physician Group to serve over 1 million customers. During the first quarter the company’s operating revenue jumped 5% and operating margins also increased despite a decrease in customer volumes. During the first quarter the company’s diluted EPS surged 12.5% year over year. The company also upped its diluted EPS forecast for the year to over $37.20, up from its previous guidance of $37.10. Amid this low-double-digit earnings growth, the stock’s forward P/E ratio of 14 is attractive, especially when compared with the industry median P/E of 18.86. Average analyst price target on the stock set by Wall Street is $611, which present a 12% upside from the current stock price.
Artisan Partners analyzed Elevance Health, Inc. (NYSE:ELV)’s performance in its Q4 2023 investor letter. Here is what the firm has to say:
“Our top seven holdings are American Express (the world’s leading premium closed loop credit card network operator), Samsung Electronics (the leading global manufacturer of memory semiconductors), Berkshire Hathaway (the holding company run by Warren Buffett), Elevance Health, Inc. (NYSE:ELV) (a leading US health insurer), Danone (global food and nutrition), Heidelberg Materials (global cement and aggregates) and Alphabet (global Internet search). Our top seven are certainly not as dominant or as profitable collectively as their Magnificent Seven counterparts. But they are durable, attractive businesses with good growth prospects. Elevance benefits from continued growth in health care expenditures as our society ages. And so on.”
Overall, Elevance Health, Inc. (NYSE:ELV) ranks 4th on Insider Monkey’s list titled 10 Best Stock Picks of Billionaire Leon Cooperman in 2024. While we acknowledge the potential of Elevance Health, Inc. (NYSE:ELV), 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 more promising than Elevance Health, Inc. (NYSE:ELV) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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