Vulcan Value Partners on CVS Health Corp. (CVS): “We Determined its Value has not Grown”

Vulcan Value Partners, an investment management firm, published its “Large Cap, Small Cap, Focus Composite, Focus Plus Composite, and All Cap Composite” first quarter 2021 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap Composite Fund delivered a 7.1% net return for the first quarter of 2021, 20.4% for the Small Cap, 5.5% for both the Focus  Composite and Focus Plus Composite Fund,  and 8.7% return was delivered by its All Cap Composite Fund for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Vulcan Value Partners, in its Q1 2021 investor letter, mentioned CVS Health Corporation (NYSE: CVS), and shared their insights on the company. CVS Health Corporation is a Woonsocket, Rhode Island-based healthcare company that currently has a $117.4 billion market capitalization. Since the beginning of the year, CVS delivered a 30.61% return, extending its 12-month gains to 40.84%. As of May 19, 2021, the stock closed at $89.21 per share.

Here is what Vulcan Value Partners has to say about CVS Health Corporation in its Q1 2021 investor letter:

“We sold our position in CVS Health Corp. to allocate capital to companies with larger margins of safety. During the five years that we owned CVS Health Corp., the company acquired Aetna. At the time, we also owned Aetna, and we believed the combination of the two companies would create additional value. After the acquisition, its business performance has been disappointing. We reevaluated our assumptions and determined its value has not grown.”

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Our calculations show that CVS Health Corporation (NYSE: CVS) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, CVS Health Corporation was in 56 hedge fund portfolios, compared to 61 funds in the third quarter. CVS delivered a 24.73% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.