Humana (HUM, Financial) is a leader and near pure play in the fastest growing sector of managed care, Medicare Advantage. Humana's growth and scale advantages have allowed the company to make targeted investments in its members' health, resulting in fewer unnecessary hospitalizations and lower chronic care costs. The company reinvests most of these savings back into the health plan, resulting in a continuously improving customer value proposition. Further, we believe Humana has a long runway ahead as it benefits from an aging population and continued conversion of the more than 60% of seniors who are still enrolled in traditional Medicare. We were able to purchase shares at a near 20% discount to the S&P 500 earnings multiple, which we believe doesn't give the company enough credit for its competitive advantages and secular growth outlook.
From David Herro (Trades, Portfolio) and Bill Nygren (Trades, Portfolio)'s Oakmark Global Select Fund first-quarter 2021 commentary.
