Core Insights - Baupost Group's latest 13F filing reveals a highly selective and concentrated portfolio, focusing on durable businesses with long-term cash generation potential [1][2] Investment Moves - **Restaurant Brands International (QSR)**: Increased by 4,203,300 shares to 8,252,862 shares, representing a $529.3 million position (11.05% of the portfolio). This is now Baupost's largest equity holding, indicating a belief in significant mispricing relative to its stable franchise model and cash flows [3][4] - **Elevance Health (ELV)**: Increased by 703,000 shares to 1,319,000 shares, totaling a $426.2 million position (8.90%). The increase suggests confidence in the company's predictable cash flows and resilience in a politically noisy sector [5][6] - **Union Pacific (UNP)**: Newly established position with 1,496,204 shares, valued at $353.7 million (7.38%). The railroad's high barriers to entry and pricing power align with Baupost's focus on downside protection [7][8] - **Alphabet (GOOG)**: Reduced by 775,850 shares to 1,858,138 shares, now a $452.6 million position (9.45%). The reduction reflects portfolio risk management rather than a loss of conviction [9] - **CRH plc (CRH)**: Trimmed by 442,000 shares to 3,383,395 shares, valued at $405.7 million (8.47%). The trim indicates a disciplined approach to valuation, despite the long-term thesis remaining intact [10] - **Full Exits**: Baupost exited several positions entirely, including Viasat, Liberty Broadband, ICON plc, and Amcor, signaling a shift in risk-reward balance [11][12] Strategic Focus - The quarter was characterized by conviction-driven capital redeployment into high-confidence ideas, particularly in sectors like restaurants, railroads, healthcare, and materials [13][14] - Trimming positions like GOOG and CRH reflects a focus on risk management and valuation discipline rather than a bearish outlook [15] - The top 10 positions account for over 75% of disclosed assets, emphasizing Baupost's belief in concentration as a strategy against ignorance [16] - The portfolio prioritizes downside protection, with upside driven by business durability rather than macroeconomic bets [17]

Group 1: Market Overview - The analysis covers the performance of the S&P 500 index, indicating its current trends and potential future movements [1] - The report highlights the overall market sentiment and economic indicators influencing investor behavior [1] Group 2: Company-Specific Insights - Elevance Health Inc is noted for its strong financial performance, with significant revenue growth reported in the latest quarter [1] - Matador Resources Company is discussed in the context of its operational efficiency and production levels, which have shown positive trends [1] - Flowco Holdings Inc is analyzed for its market positioning and strategic initiatives aimed at enhancing its competitive edge [1]

Core Insights - U.S. managed healthcare insurers are undergoing significant transformation due to rising medical costs, increased regulatory scrutiny, and a surge in investments in data and value-based care [1] - Scale, diversification, and disciplined capital allocation are crucial for payers to protect margins and sustain long-term growth [1] - UnitedHealth Group (UNH) and Elevance Health, Inc. (ELV) are two major players in the health insurance and managed care sector [1] UnitedHealth Group (UNH) - UNH, with a market cap of nearly $298 billion, is the largest health insurer in the U.S. and operates beyond traditional insurance through its Optum healthcare services unit [4] - The company serves 50.1 million people as of September 30, 2025, reflecting a 1.6% year-over-year growth [5] - Total revenues increased by 11.6% year-over-year in the first nine months of 2025, with UnitedHealthcare growing by 15% and Optum by 6.6% [6] - UNH is divesting assets, including a $1 billion sale of its South American operation, Banmedica, to streamline operations and address regulatory challenges [7] - The company ended Q3 2025 with $30.6 billion in cash and short-term investments, with a total debt-to-capital ratio of 41.6% [8] - Rising medical costs have pressured profit margins, with the medical care ratio increasing to 88.1% in Q3 2025 from 84.9% the previous year [10] Elevance Health, Inc. (ELV) - ELV, with a market cap of $77.4 billion, is a diversified managed care organization focusing on growth and operational efficiency [11] - The Carelon division, which integrates care delivery and data analytics, saw operating revenues rise by 35.4% year-over-year [12] - Total revenues for ELV increased by 13.9% year-over-year in the first nine months of 2025, supported by strong growth in premiums and product revenues [13] - Strategic acquisitions have strengthened ELV's portfolio, while divesting underperforming segments allows for resource reallocation [14] - Total expenses rose by 15% year-over-year in the first nine months of 2025, with the benefit expense ratio deteriorating to 88.9% [15] Comparative Analysis - Both UNH and ELV face unfavorable earnings estimates for 2025 due to rising costs, with UNH expected to see a 41.1% decline in EPS while ELV anticipates a 9.2% decline [16] - Valuation analysis shows ELV is more attractive, trading at a forward P/E of 12.68X compared to UNH's 18.69X [17] - In the past three months, UNH shares declined by 4.8% due to concerns over medical costs and investigations, while ELV shares increased by 7.8% [19] Conclusion - Both companies are navigating a challenging managed care environment with rising medical costs and regulatory pressures [22] - UNH has significant scale and the Optum platform but faces short-term margin pressures [22] - ELV appears to be in a stronger position with strategic market exits and a growing Carelon platform, offering a better near-term risk-reward profile [23]

Core Insights - Artisan Partners' "Artisan Value Fund" reported a positive performance in Q3 2025, with returns of 0.83%, 0.91%, and 0.90% for its Investor Class, Advisor Class, and Institutional Class, respectively, against a 5.33% return for the Russell 1000 Value Index [1] Company Analysis - Elevance Health, Inc. (NYSE:ELV) is highlighted as a key stock in the Artisan Value Fund's portfolio, with a one-month return of 5.28% and a 52-week loss of 5.56%, closing at $348.38 per share with a market capitalization of $77.42 billion on December 29, 2025 [2] - The fund made a strategic decision to purchase Elevance Health, swapping it for Cigna, as both companies operate in the health insurance sector but have different business mixes. Elevance is noted for its diverse offerings in commercial, Medicare Advantage, and Medicaid, while Cigna has a larger pharmacy benefits management (PBM) business [3] - The investment case for Elevance is based on the expectation that its currently depressed earnings will recover as pricing adjusts to rising costs, with shares trading under 10X expected earnings per share compared to a 10-year average of 16X [3]

Core Insights - Elevance Health, Inc. (NYSE:ELV) is currently viewed as one of the best affordable healthcare stocks to buy, despite a recent downgrade by Deutsche Bank from Buy to Hold, with a price target reduction from $332 to $320 [1] - Following disappointing Q2 earnings, Elevance Health's stock dropped by 18.66%, although BofA raised its price target from $370 to $385 while maintaining a Neutral rating, indicating higher peer multiples [2] Management and Governance - Elevance Health's board appointed Amy Schulman as an independent director, effective January 12, 2026, who will serve on the Audit and Finance Committees, bringing expertise in regulatory strategy and healthcare innovation [3] - The appointment of Schulman is part of Elevance Health's strategy for board refreshment, aiming for independent, diverse, and future-focused leadership aligned with stakeholder priorities [4] Product and Service Expansion - Elevance Health announced the expansion of its Virtual Assistant, a digital tool designed to help members navigate their benefits and access care, available through the Sydney Health app and affiliated health plan websites [5] Business Segments - Elevance Health operates through several segments: Health Benefits, CarelonRx, Carelon Services, and Corporate and Other, with the Health Benefits segment providing a range of health plans and services, and CarelonRx managing pharmacy services [6]

Core Insights - Elevance Health, Inc. is valued at approximately $76.5 billion and aims to improve health outcomes for individuals, families, and communities throughout their healthcare journey [1] - The company serves over 109 million consumers with a comprehensive portfolio that includes medical, pharmacy, behavioral, clinical, home health, and complex care solutions [2] Financial Performance - Elevance Health's total revenue for fiscal 2025 third-quarter increased by 12% year over year to $50.71 billion, surpassing consensus estimates of $49.52 billion [5] - Despite a 30% year-over-year decline in adjusted EPS to $6.03, this figure exceeded expectations of $4.98, indicating strong operational execution [6] Market Expectations - Wall Street analysts predict a nearly 17% year-over-year decline in EPS to $3.19 for the upcoming fiscal 2025 fourth-quarter earnings report [3] - Projections indicate continued pressure on earnings, with fiscal 2025 EPS expected to drop by 9.2% to $30, followed by an 8.6% decline in fiscal 2026 to $27.41 [3] Stock Performance - Elevance Health shares have decreased by 6% over the past year, contrasting with a 16% increase in the S&P 500 Index and a 20.1% rise in the SPDR S&P Health Care Services ETF [4]

Group 1 - Elevance Health will release its fourth quarter and full year 2025 financial results on January 28, 2026, at 6:00 a.m. EST [1] - A conference call to review these results and the company's outlook will take place at 8:30 a.m. EST on the same day [1] - The conference call can be accessed via specific domestic and international numbers, with a replay available from January 28, 2026, until February 27, 2026 [3] Group 2 - Elevance Health serves 109 million consumers through a diverse portfolio of healthcare solutions, including medical, pharmacy, behavioral, clinical, home health, and complex care [2] - The company's purpose is to improve the health of humanity by supporting consumers, families, and communities throughout their healthcare journey [2]

Core Viewpoint - The stock prices of major U.S. health insurance companies declined following President Trump's announcement that he would meet with insurance companies in the coming weeks to negotiate lower prices [1][2]. Group 1: Market Reaction - Major health insurance stocks, including Humana (HUM), UnitedHealthcare (UNH), Cigna (CI), CVS Health (CVS), and Elevance Health (ELV), either retraced gains or fell further after Trump's comments [1][2]. - The decline in stock prices occurred after a news event where Trump announced pricing agreements with nine pharmaceutical companies [1][2]. Group 2: Trump's Statements - Trump indicated that he would convene large, wealthy insurance companies to persuade them to lower prices [3]. - He expressed optimism that a single discussion could lead to price reductions of 50%, 60%, or even 70%, suggesting that these companies have been highly profitable [4].

Upgrades - Keefe Bruyette upgraded Bain Capital Specialty Finance (BCSF) to Outperform from Market Perform with an unchanged price target of $16, citing attractive entry point for shares [2] - JPMorgan upgraded Paccar (PCAR) to Overweight from Neutral with a price target of $133, increased from $108, due to offsetting tariff-related headwinds following the latest Section 232 proclamation [3] - Wells Fargo upgraded Generac (GNRC) to Overweight from Equal Weight with a price target of $195, up from $186, highlighting a "near-free call option" on data center growth after recent share pullback [4] - Barclays upgraded Cummins (CMI) to Overweight from Equal Weight with a price target of $546, increased from $515, reflecting new emissions rules and reduced R&D expenses [5] - Citizens upgraded Stryker (SYK) to Outperform from Market Perform with a price target of $440, citing reasonable valuation at current share levels [5] Downgrades - Wedbush downgraded Lyft (LYFT) to Underperform from Neutral with a price target of $16, down from $20, due to risks from autonomous vehicle disruption in the U.S. ridesharing market [6] - JPMorgan downgraded Lockheed Martin (LMT) to Neutral from Overweight with a price target of $515, up from $465, based on out-year cash flow estimates being below consensus [6] - Raymond James downgraded Allegiant Travel (ALGT) to Outperform from Strong Buy with a price target of $98, up from $78, citing valuation concerns after recent share strength [6] - Deutsche Bank downgraded Elevance Health (ELV) to Hold from Buy with a price target of $320, down from $332, due to reduced estimates and challenging macro environment [6] - Williams Trading downgraded Birkenstock (BIRK) to Hold from Buy with a price target of $51, down from $75, following earnings report and lack of clarity from management [6]

Core Insights - Elevance Health, Inc. (NYSE:ELV) is recognized as one of the 12 Best Long Term US Stocks to Buy Now [1] - BofA has raised its price target for Elevance Health to $385 from $370, maintaining a Neutral rating, reflecting higher sector valuations [2] - The company's third-quarter results demonstrated steady execution, with the benefit expense ratio aligning with management's expectations [3] Financial Performance - Total operating revenue for the quarter reached $50.1 billion, marking a 12% year-over-year increase, driven by higher premium yields, recent acquisitions, and increased Medicare Advantage membership [5] - Management reaffirmed an adjusted EPS target of approximately $30 for 2025, viewing $27 as the appropriate earnings baseline after accounting for nonrecurring items [4] Strategic Focus - The company is prioritizing the integration of recent acquisitions and capital returns, with share repurchases being a key focus area [4]