Olivier Le Moal
Every once in a while, the market gives you an opportunity so obvious it feels wrong not to take it. That's what's happening with Centene (NYSE:CNC) today. The stock is trading at roughly 0.5x book value -- yes, you read
Centene: The Cheapest Insurer I've Ever Seen
Summary
- CNC is trading at half of book value and under 9x earnings, an extreme undervaluation for a cash-generating insurer.
- The recent guidance cut is a temporary earnings reset, not a structural issue -- premium increases and cost controls will restore margins as per standard industry cycles.
- Market panic and mechanical selling have created a rare value opportunity; insurance fundamentals and rate adjustments ensure earnings normalization over time.
- Buying CNC at these levels offers upside, with potential to double as sentiment shifts and the stock re-rates to peer multiples or book value.
Giacomo Bocanegra currently serves as portfolio manager for the hedge fund Bocanegra Asset Management LP. Before BAM, Mr. Bocanegra held equity research roles at Lucerne Capital Management and Wells Fargo. He holds a bachelor’s degree in Economics from Lawrence University.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of CNC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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