Centene Corporation (CNC): A Bull Case Theory

Core Thesis - Centene Corporation (CNC) is viewed as a deep value opportunity with a current share price of $39.34 and a cost basis for investors at $28.15 per share, indicating a discounted valuation relative to its fundamental strength [1][2]. Company Overview - Centene Corporation operates as a healthcare enterprise providing services to under-insured and uninsured families, as well as commercial organizations in the United States [2]. - As the largest Medicaid provider in the U.S., CNC is positioned as a dominant low-cost player in a specialized segment of the healthcare industry, benefiting from scale advantages [3]. Financial Metrics - The estimated maximum liquidation value of Centene exceeds its current market capitalization by over 50%, suggesting substantial potential gains through asset sales [4]. - CNC's seven-year average owner earnings are approximately $2.37 billion, indicating that investors could recoup their investment in about eight years at the current valuation, or in closer to four years if recent earnings levels are maintained [4]. Investment Strategy - The investment strategy involves holding CNC shares unless a superior opportunity arises or there is a significant change in the company's or industry's fundamentals [5]. - A key aspect of the investment thesis is the ability of healthcare insurers to raise prices over time, which supports earnings durability and incremental value creation [5]. Market Context - The broader profitability upswing expected across health insurers is driven by the short-tail nature of healthcare risk, allowing for pricing resets and margin recovery [3].