Should You Invest in Centene Corporation (CNC)?

Oakmark Funds, advised by Harris Associates, released its “Oakmark Select Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned -6.19% in the second quarter compared to a 4.28% return for the S&P 500 Index. The fund returned 11.56% since its inception compared to the index’s return of 9.69% over the same period. The largest contributing sector was communication services while industrials and health care were the leading detractors. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Oakmark Select Fund highlighted stocks like Centene Corporation (NYSE:CNC) in the Q2 2024 investor letter. Centene Corporation (NYSE:CNC) is a healthcare enterprise. The one-month return of Centene Corporation (NYSE:CNC) was -1.55%, and its shares gained 3.40% of their value over the last 52 weeks. On July 12, 2024, Centene Corporation (NYSE:CNC) stock closed at $67.86 per share with a market capitalization of $36.214 billion.

Oakmark Select Fund stated the following regarding Centene Corporation (NYSE:CNC) in its Q2 2024 investor letter:

"Centene Corporation (NYSE:CNC) is one of the largest health insurers in the U.S. The company specializes in three major government-sponsored programs: Medicaid, Marketplace and Medicare Advantage, each of which benefits from long-term secular tailwinds. In Medicaid, states are steadily outsourcing their programs to companies like Centene to reduce costs and improve care quality. Managed Medicaid penetration has increased throughout the past decade and we expect further gains over time. In Marketplace, growth is driven by the trend toward more individuals buying health insurance. Centene holds the #1 market share in both of these programs and is well positioned to capitalize on their continued growth. Finally, we believe management is successfully turning around Centene’s Medicare business and expect the division to generate positive earnings over time. After adjusting for losses stemming from Centene's Medicare business, we were able to purchase shares at a single-digit P/E multiple, which we think is too cheap for a leading, secularly growing Medicaid company and an improving Medicare business."

A doctor holding a clipboard in a hospital ward, discussing patient treatment plan with the nurses.

Centene Corporation (NYSE:CNC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held Centene Corporation (NYSE:CNC) at the end of the first quarter which was 57 in the previous quarter. Centene Corporation (NYSE:CNC) reported an adjusted diluted earnings per share of $2.26 in the first quarter, up 7% from Q1 2023. While we acknowledge the potential of Centene Corporation (NYSE:CNC) as an investment, 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Centene Corporation (NYSE:CNC) and shared the list of largest companies in the US. In addition, please check out our hedge fund investor letters Q2 2024 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.