Centene (CNC) in Oakmark Global Fund Q1 2024

Strategic Positioning in Government-Sponsored Health Programs

Apr 15, 2025

Summary

Focus on Medicaid, Marketplace, and Medicare Advantage programs.
Benefits from long-term secular tailwinds in managed care.
Risks include past missteps in Medicare Advantage segment.
Trades at approximately 9x estimated normal earnings power.
Potential for EPS growth at a low double-digit rate.

In the Oakmark Global Fund's 1st-Quarter Commentary 2024, Centene (CNC, Financial) was introduced as a new position. The company is a major player in health insurance, specializing in government-sponsored programs such as Medicaid, Marketplace, and Medicare Advantage. Each of these programs is supported by long-term secular growth trends, with Centene holding a leading market share in Medicaid and Marketplace.

"Centene currently trades for about 9x our estimate of normal earnings power, which we believe is a compelling value for a business that generates healthy returns on capital and is capable of growing EPS at a low double-digit rate." — Oakmark Global Fund, Q1 2024 Fund Letter

Read full letter at gurufocus Bill Nygren's Oakmark Global Fund 1st-Quarter Commentary 2024 Q1 page.

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