Core Insights - Oakmark Fund underperformed the S&P 500 Index in Q3 2025 but has outperformed since inception [1] - Financials and energy sectors were the largest contributors to performance, while health care and consumer staples detracted [1] Company Analysis: Centene Corporation (NYSE:CNC) - Centene Corporation is a healthcare enterprise focused on services for under-insured and uninsured families and commercial organizations [2] - The stock experienced a one-month return of 12.92% but has lost 48.16% over the past 52 weeks, closing at $37.83 with a market cap of $18.432 billion on October 9, 2025 [2] - Centene was the top detractor for Oakmark Fund in Q3 2025 due to a significant decline in stock price after withdrawing and then lowering its 2025 earnings per share guidance, attributed to cost pressures in Medicaid and Marketplace businesses [3] - The current valuation of Centene suggests structural headwinds, but the company is expected to see a meaningful earnings recovery in the coming years [3] Hedge Fund Interest - Centene Corporation is not among the 30 most popular stocks among hedge funds, with 59 hedge fund portfolios holding the stock at the end of Q2 2025, down from 64 in the previous quarter [4] - While Centene has potential as an investment, certain AI stocks are viewed as offering greater upside potential with less downside risk [4]

Core Insights - WellCare of North Carolina is investing over $1.6 million in local nonprofit organizations to support health-related resources for vulnerable communities in North Carolina [1][2] - The funding initiative, which started in 2024 and will continue through 2025, aims to address critical healthcare needs such as food security, housing stability, and mental wellness [1][2] - WellCare's approach focuses on hyperlocal investments to directly meet the unique needs of individual communities, thereby improving the health of its members and the state [3] Company Overview - WellCare of North Carolina is a subsidiary of Centene Corporation, providing government-sponsored managed care services primarily through Medicaid [4] - The company operates various health plans, including Marketplace and Medicare Advantage, and is committed to helping individuals with complex needs [4] - Centene Corporation is a Fortune 500 company that focuses on delivering integrated, high-quality, and cost-effective healthcare services to under-insured and uninsured individuals across the nation [5]

Core Viewpoint - Centene Corporation is facing significant challenges, including a projected non-GAAP loss for Q3 and a substantial decline in stock prices over the past year, raising concerns about its future earnings and the sustainability of its business model [2][4][5]. Financial Performance - Centene is expected to report a non-GAAP loss of $0.18 per share for Q3, a sharp decline from a profit of $1.62 per share in the same quarter last year [2]. - For the full fiscal year 2025, the non-GAAP EPS is projected to be $1.64, down 77.1% from $7.17 in 2024, but is expected to rebound to $2.94 per share in fiscal 2026, representing a 79.3% year-over-year increase [3]. Stock Performance - Centene's stock has decreased by 46.3% over the past 52 weeks, significantly underperforming the Health Care Select Sector SPDR Fund's 4.5% decline and the S&P 500 Index's 17.9% increase during the same period [4]. - A notable drop of 40.4% in stock price occurred on July 2 after the company withdrew its 2025 earnings guidance, which was attributed to unexpected enrollment trends and rising patient costs [5]. Operational Challenges - The company has identified rising medical costs in its Medicaid business, particularly in behavioral health and high-cost drug categories, as significant pressure points [6]. - Centene is adjusting its 2026 ACA rates to account for higher morbidity assumptions and plans to implement corrective pricing strategies across most states, raising concerns about the sustainability of ACA economics [6].

Core Insights - UnitedHealth Group Incorporated (UNH) has experienced a significant recovery, with shares increasing by 12% over the past month, reducing its year-to-date loss to 29.1% [1] - This performance outpaces the broader industry, which gained 9.3%, and the S&P 500 Index, which rose by 4% during the same period [1] - Key competitors showed varied performance, with Humana Inc. (HUM) declining by 4.9% and Elevance Health, Inc. (ELV) increasing by 13.6% [1] Financial Performance - UnitedHealth's stock has rebounded, but it still trades above the Wall Street average price target of $324.48, indicating a potential downside of 9.6% from current levels [6] - The earnings outlook is concerning, with a projected 41.4% year-over-year drop in 2025 EPS to $16.21, despite a 12.1% expected increase in revenues [14] - The company generated $6.3 billion in operating cash flow during the first half of 2025, contributing to its financial stability [18] Market Position and Strategy - UnitedHealth is recognized for its scale, diversification, and strong cash flow, serving 50.1 million members as of June 30, 2025, a 2.1% increase from the previous year [16] - Management plans to reduce its Medicare Advantage presence, exiting over 100 plans affecting approximately 180,000 members, in response to regulatory pressures and rising healthcare costs [17] - The company continues to reward shareholders, distributing over $5.5 billion through dividends and buybacks in the first half of 2025 [19] Challenges and Risks - UnitedHealth faces elevated medical costs and a worsening medical loss ratio, which increased from 83.2% in 2023 to 89.4% in Q2 2025, indicating shrinking margins [11] - Regulatory scrutiny from the Department of Justice regarding Medicare billing practices and pharmacy benefit management adds uncertainty to the company's operations [12] - Analyst sentiment is cautious, with the company missing earnings estimates in two of the last four quarters, reflecting ongoing profitability pressures [15]

Core Insights - Deep-pocketed investors are showing a bullish sentiment towards Centene (NYSE:CNC), indicating potential significant developments ahead [1] - Recent options activity reveals a split sentiment among investors, with 46% bullish and 46% bearish [2] - The target price for Centene is projected to range from $17.5 to $50.0 based on trading activity over the past three months [3] Options Activity - In the last 30 days, there has been unusual options activity for Centene, with a notable volume and open interest in both calls and puts [4][5] - The largest options trades include bullish call options with significant total trade prices, indicating investor confidence [9] Company Overview - Centene is a managed care organization focusing on government-sponsored healthcare plans, serving 22 million medical members as of December 2024, with a majority in Medicaid [10] - The company has a military contract and provides Medicare Part D pharmaceutical plans, diversifying its revenue streams [10] Market Analysis - Recent analyst ratings suggest an average target price of $37.0, with one analyst maintaining an Equal-Weight rating and another a Buy rating with a target of $39 [12][13] - Current trading volume stands at 3,118,567, with the stock price at $38.75, reflecting a slight increase [15]

Group 1: Market Overview - Equities continued to rise in Q3 2025, with the S&P 500 Index increasing by 8.1% and the Nasdaq Composite rising by 11.2% to record highs [1] - Investor optimism was fueled by favorable tariff results, the One Big Beautiful Bill in July, anticipated interest rate cuts, and strong corporate earnings, particularly in technology and the Magnificent Seven [1] - The Russell 1000 Growth Index rose by 10.5% during the quarter [1] Group 2: ClearBridge Large Cap Growth Strategy Performance - The strategy delivered solid absolute performance in Q3 2025 but underperformed the benchmark due to underexposure to perceived AI winners and holding several names considered AI losers [1] - The fund's top five holdings were highlighted as its best picks for 2025 [1] Group 3: UnitedHealth Group Incorporated (NYSE:UNH) Analysis - UnitedHealth Group is a diversified healthcare company with a one-month return of 14.21%, but its shares have lost 39.07% over the last 52 weeks [2] - As of October 3, 2025, UnitedHealth Group's stock closed at $360.20 per share, with a market capitalization of $326.224 billion [2] - The healthcare sector faces questions regarding spending levels, tariff concerns, and regulatory risks, leading to a complete exit from UnitedHealth Group's position in July [3] Group 4: Hedge Fund Interest and Revenue Performance - UnitedHealth Group ranked 18th among the 30 Most Popular Stocks Among Hedge Funds, with 159 hedge fund portfolios holding its stock at the end of Q2 2025, up from 139 in the previous quarter [4] - In Q2 2025, UnitedHealth Group reported revenues of nearly $112 billion, reflecting a 13% increase compared to the prior year's quarter [4] - While UnitedHealth Group is acknowledged as a potential investment, certain AI stocks are believed to offer greater upside potential and less downside risk [4]

Group 1 - UnitedHealth Group Incorporated (NYSE:UNH) is recognized as one of the Top 10 Long-Term Stocks to Invest In according to David Tepper [1] - Bernstein has reaffirmed its Buy rating for UnitedHealth Group, maintaining a price target of $379 [1][3] - UBS also maintains a Buy rating on UnitedHealth Group with a price target of $378, citing optimism following the company's reaffirmation of 2025 guidance despite recent management changes [3] Group 2 - Analyst Lance Wilkes from Bernstein sees strong short-term potential in UnitedHealth, highlighting its stability and earnings upside [2] - The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx, positioning it as a leading healthcare company in the U.S. [4] - The average price target for UnitedHealth Group, based on analysts' estimates, is $325, indicating a potential downside of almost 5.88% from current levels [4]

Company Overview - Molina Healthcare, Inc. (MOH) is a managed care company providing health insurance and related services primarily through government-sponsored programs such as Medicaid, Medicare, and state health insurance exchanges, with a market capitalization of approximately $10.4 billion [1] Earnings Expectations - For fiscal Q3 2025, analysts anticipate a profit of $3.97 per share, representing a 33.9% decline from $6.01 per share in the same quarter last year [2] - For the full fiscal year 2025, the expected profit is $18.87 per share, down 16.7% from $22.65 in fiscal 2024, but projected to grow 4% year-over-year to $19.63 in fiscal 2026 [3] Stock Performance - MOH stock has decreased by 41.5% over the past 52 weeks, underperforming the SPDR S&P Health Care Services ETF's 7% gains and the S&P 500 Index's 17.6% increase during the same period [4] Margin Pressures - The decline in stock price is attributed to rising medical costs across its Medicaid, Medicare, and Affordable Care Act (ACA) businesses, which are squeezing margins, leading the company to cut its full-year earnings guidance [5] Regulatory Risks - There is significant regulatory and policy uncertainty, particularly regarding Medicaid funding, ACA subsidies, and changes to health insurance programs, which adds additional risk for investors [6] Analyst Ratings - The overall rating for MOH stock is "Hold," a downgrade from the previous "Moderate Buy" rating three months ago, with 17 analysts covering the stock: four recommend "Strong Buy," 11 advise "Hold," one suggests "Moderate Sell," and one gives a "Strong Sell" rating [7] - The stock is currently trading above its mean price target of $189.43, with a Street-high price target of $228 indicating a 17.4% premium to current price levels [7]

Group 1 - The Cigna Group (NYSE:CI) is highlighted by UBS as a top choice in the Healthcare Facilities & Managed Care sector, maintaining a Buy rating with a price target of $390 [1] - Cigna is recognized as the largest Managed Care Organization with low susceptibility to government business volatility [1] - The company is on a long-term earnings growth trajectory, supported by share buybacks, margin recovery in its stop loss business, and opportunities in specialty pharmacy [2] Group 2 - Despite industry concerns regarding Pharmacy Benefit Management reform, UBS believes that potential legislation will not significantly impact Cigna's earnings and may even serve as a clearing event for its shares [2] - Cigna specializes in providing insurance and associated services in the U.S., including pharmaceutical benefits, home delivery pharmacy, and specialty pharmacy distribution [3]

Core Viewpoint - UnitedHealth Group is currently facing challenges but is implementing strategies for a turnaround, with signs of improvement in stock performance and management addressing key issues [2][11]. Company Performance - UnitedHealth Group has experienced a year-to-date loss of 31%, significantly underperforming the healthcare sector, which is down 1% [2]. - The company reported second-quarter revenue of $111.6 billion, an increase from $98.9 billion a year ago, but its net margin has decreased to 3.2% from 4.3% the previous year [7]. Management Challenges - The company faced its first earnings miss since 2008 in the first quarter, primarily due to management misjudgments regarding medical cost assumptions, leading to a $6.5 billion shortfall in expected medical costs for 2025 [3][4]. - CEO Tim Noel indicated that half of the shortfall was attributed to the Medicare portfolio, with an additional $2.3 billion from the commercial business [4]. Strategic Adjustments - UnitedHealth Group is taking steps to rectify its pricing challenges, including adjusting bids for Medicare Advantage and evaluating its commercial markets for potential exits [5][8]. - The company plans to work with Medicare to adjust pricing in 2026 and 2027 to achieve a target margin range between 2% and 4% [8]. Leadership and Market Sentiment - The company has undergone significant leadership changes, including the death of UnitedHealthcare CEO Brian Thompson and the resignation of CEO Andrew Witty [6]. - Warren Buffett's Berkshire Hathaway purchased 5 million shares of UnitedHealth Group this year, indicating confidence in the company's turnaround strategy and its 2.5% dividend yield [10].