Here's Why Oakmark Equity and Income Fund Added Molina Healthcare (MOH) to its Portfolio

Oakmark Funds, advised by Harris Associates, released its “Oakmark Equity and Income Fund” Q1 2025 investor letter. A copy of the letter can be downloaded here. The fund’s investor class delivered 0.91% during the quarter compared to -1.45% returns for the 60% S&P 500 / 40% Bloomberg U.S. Aggregate Bond Index. The equity portfolio returned -0.25% in the quarter, compared to -4.27% for the S&P 500 Index. The fixed-income portfolio returned 2.91% compared to 2.78% for the Bloomberg U.S. Aggregate Bond Index. The fund has allocated 58.1% in equities, 41.1% in fixed income, and 0.8% in cash. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first-quarter 2025 investor letter, Oakmark Equity and Income Fund highlighted stocks such as Molina Healthcare, Inc. (NYSE:MOH). Molina Healthcare, Inc. (NYSE:MOH) offers managed healthcare services that operate through Medicaid, Medicare, Marketplace, and Other segments. The one-month return of Molina Healthcare, Inc. (NYSE:MOH) was 5.56%, and its shares lost 7.63% of their value over the last 52 weeks. On April 16, 2025, Molina Healthcare, Inc. (NYSE:MOH) stock closed at $332.38 per share with a market capitalization of $18.181 billion.

Oakmark Equity and Income Fund stated the following regarding Molina Healthcare, Inc. (NYSE:MOH) in its Q1 2025 investor letter:

"Molina Healthcare, Inc. (NYSE:MOH) is a leading managed care company. Molina is the fourth largest player in managed Medicaid but has consistently delivered industry-leading growth and margins. In our view, this is thanks to the company’s exceptional management team and culture of operational excellence. We think Molina has a long runway for growth via continued share gains in Medicaid and untapped opportunities in their Medicare and Marketplace business segments. Recently, fundamentals have been pressured by an unprecedented redeterminations cycle in Medicaid, and valuations have compressed due to uncertainty around policy changes in a new political administration. We believe earnings pressure from redeterminations is temporary and that any Medicaid policy changes will prove manageable, providing us an opportunity to purchase shares at a meaningful discount to intrinsic value."

Molina Healthcare, Inc. (NYSE:MOH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Molina Healthcare, Inc. (NYSE:MOH) at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the potential of Molina Healthcare, Inc. (NYSE:MOH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We covered Molina Healthcare, Inc. (NYSE:MOH) in another article, where we shared the list of best healthcare stocks for long-term investment. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.