WellPoint has a strong cash position and cash flow, better than most managed- health insurers. As well, the company has become a top player in the Medicaid managed-healthcare market thanks to its Amerigroup acquisition. The addition of Amerigroup will increase the number of senior patients for the company, expected to help drive revenue 20% higher in 2013.
WellPoint also snatched up Medicare specialist CareMore Health, which will help the company expand its presence in the U.S. government program for the elderly. WellPoint’s acquisition of 1-800-Contacts should help the company diversify its portfolio.
At the end of 1Q, there were 44 hedge funds long the stock. However, worth noting is that Alan Fournier’s Pennant Capital dumped the largest stake, an estimated $194 million in stock (check out Pennant’s portfolio).
Baby boom bet
Another notable addition to Tudor’s portfolio is Brookdale Senior Living, Inc. (NYSE:BKD). Brookdale Senior Living, Inc. (NYSE:BKD) managed to post 1Q EPS of $0.03 compared to the loss of $0.09 from the same quarter last year. What’s more is that free cash flow from facility operations (FFFO) was up to $0.57, above the $0.48 from the same period last year.
One of the big advantages for the company is that it’s the largest provider of senior living facilities in the U.S. This company should perform well thanks to the expected rise in baby boomers. Over the next 18 years, baby boomers will be turning 65 at a rate of about 8,000 a day, according to the AARP.
Analysts expect a 3.6% rise in revenue for 2013, and 3% growth in 2014. Although interim pressures may come from Medicare rate cuts, long-term results should be driven by acquisitions. Brookdale also trades below a couple major peers at only 1.2 times sales, compared to Assisted Living Concepts, Inc. (NYSE:ALC) at about 1.3 times and Capital Senior Living Corporation (NYSE:CSU) at 2.1 times.
Bottom line
Although PTJ likes to focus on short-term trades, I believe that there are a number of his latest additions could easily be made into long-term investments. PTJ has a couple big bets on pharma companies, both paying solid dividends. I like both drug stocks. Agilent appears to have too many headwinds, and so I’d hold off on the stock for now. Meanwhile, I think WellPoint is a solid pick with its key acquisitions. As well, Brookdale is a worthwhile investment thanks to the increasing number of baby boomers.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends WellPoint. The Motley Fool owns shares of WellPoint.
The article Billionaire Paul Tudor Jones’ Latest Additions originally appeared on Fool.com and is written by Marshall Hargrave.
Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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