A Policy-Induced Risk Pool Shift Impacted Centene (CNC) in Q3

Core Insights - Heartland Mid Cap Value Fund's portfolio increased by 1.63% in Q3 2025, underperforming the Russell Midcap® Value Index which gained 6.18% due to stock selection issues [1] - The market trends from Q2 accelerated, driven by optimism around the AI boom and rising electricity demand, leading to significant gains in large- and mid-cap growth stocks regardless of their business model quality or valuation [1] Company Analysis: Centene Corporation (NYSE:CNC) - Centene Corporation, a healthcare enterprise, experienced a one-month return of 9.56% but has lost 50.95% of its value over the past 52 weeks, closing at $35.76 per share with a market capitalization of $17.563 billion on October 10, 2025 [2] - Centene was the worst-performing holding for the fund in Q3 2025, facing challenges from a policy-induced risk pool shift in the ACA Healthcare Exchanges, which negatively impacted profit margins and led to a pre-announced earnings cut [3] - The company is taking aggressive pricing actions to restore margins and provided a positive update on its action plan in September, which helped shares recover from a sharp selloff in July [3] - The stock is currently trading at 11 times the 2026 earnings estimates, which appear increasingly achievable based on recent updates [3]