Investment management firm Vulcan Value Partners, a key player for income-partners.net followers, recently published its investor letter for the fourth quarter of 2024, offering insights into their investment strategies and market perspectives. A detailed copy of the letter is accessible for download, providing a comprehensive look at their analysis.
The year 2024 saw unexpected resilience in the U.S. economy, with large-cap stocks spearheading a robust equities market. While inflation showed signs of moderation throughout the year, it remained at elevated levels. Notably, the largest U.S. companies outperformed the broader market, and U.S. equities generally surpassed the performance of non-U.S. markets. Vulcan Value Partners’ Focus and Focus Plus strategies emerged as top performers during both Q4 and the full year 2024, while the Small Cap strategy lagged. However, all strategies delivered positive returns for the year. Specifically, the Large Cap Composite yielded -0.1% net of fees and expenses in Q4, the Small Cap Composite -7.3% net, the Focus Composite 6.3% net, the Focus Plus composite 7.4%, and the All-Cap Composite -2.5% net. For investors seeking deeper insights into Vulcan Value Partners’ prime selections for 2024, their top five holdings are a valuable resource.
In their Q4 2024 investor letter, Vulcan Value Partners specifically spotlighted UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group, a diversified healthcare giant, operates across segments including UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. While UnitedHealth Group (NYSE:UNH) experienced a 4.36% return over a single month, its shares declined by 1.11% over the preceding 52 weeks. As of January 16, 2025, the company’s stock closed at $510.59 per share, boasting a substantial market capitalization of $469.888 billion.
Vulcan Value Partners articulated their investment rationale for UnitedHealth Group Incorporated (NYSE:UNH) in their Q4 2024 letter:
“UnitedHealth Group Incorporated (NYSE:UNH), a recurring investment in our portfolio, stands as the foremost health insurer in the United States. Significantly, UnitedHealth Group also encompasses Optum, a rapidly expanding healthcare services provider. The health insurance sector remains favorably positioned, propelled by escalating healthcare expenditure driven by chronic illnesses and an aging demographic, consistently outpacing overall economic growth. The insurance arm benefits from robust network effects; a larger member base attracts more providers and vice versa. This dynamic strengthens United’s value proposition and enhances its negotiating leverage on both sides of the network. We hold the management team of UnitedHealth Group in high regard and commend their enduring vision and effective execution.”
UnitedHealth Group Incorporated (NYSE:UNH) holds the 18th position in Insider Monkey’s compilation of the 30 Most Popular Stocks Among Hedge Funds. Data indicates that 112 hedge fund portfolios included UnitedHealth Group Incorporated (NYSE:UNH) holdings at the close of Q3, slightly down from 114 in the previous quarter. UnitedHealth Group Incorporated’s (NYSE:UNH) Q3 revenues reached $101 billion, marking a 9% year-over-year increase fueled by robust growth in both Optum and UnitedHealthcare segments. While Vulcan Value Partners acknowledges the investment merits of UnitedHealth Group Incorporated (NYSE:UNH), their current investment thesis leans towards AI stocks, anticipating potentially higher returns within a shorter investment horizon. For investors seeking AI stock opportunities with similar potential to NVIDIA but at a more attractive valuation, Insider Monkey offers a report on a compelling, undervalued AI stock.
Further insights into UnitedHealth Group Incorporated (NYSE:UNH) can be found in Insider Monkey’s coverage of best dividend stocks and their Q4 2024 hedge fund investor letters overview, providing a broader context for investor research and analysis alongside Vulcan Value Partners‘ perspectives.
