Wedgewood Partners, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of +2.75% was recorded by the fund for the third quarter of 2021, outperforming the S&P 500 Index that delivered a +0.58% return for the same period, and the +1.16% gain of the Russell 1000 Growth Index. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Wedgewood Partners, in its Q3 2021 investor letter, mentioned UnitedHealth Group Incorporated (NYSE: UNH) and discussed its stance on the firm. UnitedHealth Group Incorporated is a Minnetonka, Minnesota-based healthcare and insurance company with a $396.3 billion market capitalization. UNH delivered a 19.87% return since the beginning of the year, while its 12-month returns are up by 27.42%. The stock closed at $420.36 per share on October 14, 2021.
Here is what Wedgewood Partners has to say about UnitedHealth Group Incorporated in its Q3 2021 investor letter:
“UnitedHealth Group detracted from performance due to investor concerns about Medicare premiums as well as post-COVID medical cost trends. Medicare enrollment should continue to grow at double-digits at UnitedHealthcare. Meanwhile the Company’s Optum segment should be able to help bend the cost curve if indeed post-COVID volumes pick up to above pre-COVID levels. In any case, we do not think the long-term normalized trend of medical care in the U.S. has changed substantially and would look to add to our new position on any continuing short-term concerns.”
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Based on our calculations, UnitedHealth Group Incorporated (NYSE: UNH) ranks 17th in our list of the 30 Most Popular Stocks Among Hedge Funds. UNH was in 105 hedge fund portfolios at the end of the first half of 2021, compared to 89 funds in the previous quarter. UnitedHealth Group Incorporated (NYSE: UNH) delivered a 0.91% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
