Broyhill Asset Management, a boutique investment firm, released its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. The past two years were mirror images of each other for equity investors. Global stocks increased by 22% in 2022 after declining by 18% the year before. The fourth quarter saw exceptionally high portfolio activity. Although Broyhill’s fully invested managed funds underperformed year-over-year broader equities benchmarks, they avoided problems during the falls in 2021 and 2022, and their relative performance is still well above any longer-term horizon. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Broyhill Asset Management featured stocks such as Baxter International Inc. (NYSE:BAX) in the fourth quarter 2023 investor letter. Headquartered in Deerfield, Illinois, Baxter International Inc. (NYSE:BAX) provides a portfolio of healthcare products. On February 16, 2024, Baxter International Inc. (NYSE:BAX) stock closed at $41.22 per share. One-month return of Baxter International Inc. (NYSE:BAX) was 6.79%, and its shares gained 0.54% of their value over the last 52 weeks. Baxter International Inc. (NYSE:BAX) has a market capitalization of $20.933 billion.
Broyhill Asset Management stated the following regarding Baxter International Inc. (NYSE:BAX) in its fourth quarter 2023 investor letter:
“Medical equipment and device manufacturer Baxter International Inc. (NYSE:BAX) was another Ozempic casualty. Shares slid 15% the day Novo Nordisk concluded trials showing the drug slowed the progression of chronic kidney disease, potentially impairing the company’s Renal Care business, its largest division. This was only the latest of Baxter’s problems. After levering up to buy Hillrom in 2021, every one of the company’s business segments – we counted ten before the recent restructuring – hit a wall, as increasing costs drove operating margins below 14% in recent quarters from highs north of 18% just a few years ago. Simply put, the company’s long-term, fixed contracts with large healthcare purchasing organizations were not designed to offset the levels of inflation brought on by pandemic-era supply chain struggles. As revenues slowed alongside hospital procedures, rising costs crushed operating profits. The multiple on the stock collapsed from the mid-20s towards the single digits, shaving three-quarters off the stock price and taking the market capitalization down to a low of $16 billion after shelling out nearly $12 billion for Hillrom just a few years ago. With shares trading at a trough multiple on depressed earnings, we see much room for upside surprises, and management is taking action to capitalize on the current dislocation. We expect leverage to fall back below 3x by FY25 after the company uses proceeds from the sale of its BioPharma business to pay down nearly $4 billion in debt. At the same time, the spin-off of BAX’s Renal Care segment and recently revamped reporting structure should dramatically simplify the story. We see little risk to Baxter’s normalized earnings power, which should approach $5 per share over our forecast horizon. We expect the completion of the spin and upcoming capital markets day to provide catalysts for the stock.”
Patients connected to dialysis machines in a hospital ward, highlighting the company’s dialysis and intravenous therapies.
Baxter International Inc. (NYSE:BAX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Baxter International Inc. (NYSE:BAX) was held by 44 hedge fund portfolios, up from 41 the previous quarter, according to our database.
We discussed Baxter International Inc. (NYSE:BAX) in another article and shared the list of best beaten down dividend stocks to buy. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
