Health Care

Is This the Best Time To Initiate a Position in Cigna Corporation (CI)?

Baron Funds, an investment management company, released its “Baron Health Care Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund increased by 9.08% (Institutional Shares) compared to an 11.54% gain for the Russell 3000 Health Care Index and a 7.56% gain for the S&P 500 Index. The fund fell 16.90% in 2022, compared to a 6.10% decline for the Russell 3000 Health Care Index and an 18.11% decline for the S&P 500 Index. Factors like cash exposure in the up-market, adverse stock selection, and differences in sub-industry exposures led the fund to underperform in the quarter relative to its benchmark. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Baron Funds highlighted stocks like Cigna Corporation (NYSE:CI) in the Q4 2022 investor letter. Headquartered in Bloomfield, Connecticut, Cigna Corporation (NYSE:CI) is a health services company. On January 30, 2023, Cigna Corporation (NYSE:CI) stock closed at $310.36 per share. One-month return of Cigna Corporation (NYSE:CI) was -6.33%, and its shares gained 34.67% of their value over the last 52 weeks. Cigna Corporation (NYSE:CI) has a market capitalization of $94.889 billion.

Baron Funds made the following comment about Cigna Corporation (NYSE:CI) in its Q4 2022 investor letter:

“We initiated a position in Cigna Corporation (NYSE:CI), a health services organization with two primary segments, Cigna Healthcare and Evernorth. Cigna Healthcare provides health insurance products, including a business in which Cigna provides administrative services only to plan sponsors (employers, unions, and other groups). Evernorth provides a portfolio of health care services, including pharmacy benefit management (PBM) services, care delivery services, data and analytics solutions, and distribution of specialty drugs. Each segment has a portion of business that provides steady, predictable growth. These foundational businesses, which account for roughly 60% of total revenue, include the US commercial business, the PBM business, and international. The other 40% of revenue comes from higher-growth businesses, including the specialty pharmacy business, care delivery services, and Medicare Advantage. Management targets 10% to 13% annual EPS growth over the long term. The stock trades at a significant discount to industry peers because of the company’s commercial health insurance and PBM business mix. We think the PBM business will benefit from the biosimilar wave in the next few years, and as Cigna’s higher growth businesses become a bigger percentage of the overall mix, we think the stock can appreciate at least in line with its annual EPS growth with potential for valuation expansion.”

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Cigna Corporation (NYSE:CI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 76 hedge fund portfolios held by Cigna Corporation (NYSE:CI) at the end of the third quarter, which was 66 in the previous quarter.

We discussed Cigna Corporation (NYSE:CI) in another article and shared the list of best healthcare stocks for recession. In addition, please check out our hedge fund investor letters Q4 2022 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.