CVS Health Corp. (CVS) Rebounded in Q1

Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. 2025 got out to a solid start with the market hitting all-time highs in mid-February. However, a dramatic reversal pushed the S&P 500 down 8.7%, closing the quarter down 4.3%. During the quarter, the strategy returned -9.5% net of fees compared to the S&P 500’s -4.3% return. According to a three-factor performance attribution model, allocation and interaction effects contributed positively to the portfolio’s performance, which were partially offset by selection effects. In addition, you can check the fund’s top 5 holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Patient Capital Opportunity Equity Strategy highlighted stocks such as CVS Health Corporation (NYSE:CVS). CVS Health Corporation (NYSE:CVS) is a US-based health solutions provider. The one-month return of CVS Health Corporation (NYSE:CVS) was -2.99%, and its shares lost 2.61% of their value over the last 52 weeks. On April 23, 2025, CVS Health Corporation (NYSE:CVS) stock closed at $65.57 per share with a market capitalization of $82.774 billion.

Patient Capital Opportunity Equity Strategy stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q1 2025 investor letter:

"CVS Health Corporation (NYSE:CVS) went from a top detractor in the fourth quarter to the top contributor in the first quarter. The company faced significant pressure last year from disappointing Medicare Advantage results—an industry-wide challenge. We felt the issues were well understood and expected improvements in pricing for 2026. We took the opportunity to add to the position. Since then, CMS (Center for Medicare & Medicaid Services) has announced 2026 rates at the high end of expectations, supporting a significant earnings power recovery. On a longer-term basis, we continue to think CVS has an attractive combination of assets owning a healthcare benefits business (Aetna), a pharmacy-benefits manager (Caremark), an in-home evaluation business (Signify Health) and in-home primary care business (Oak Street Health) supporting the industry transition to a value-based care model. With new leadership in place, a 4% dividend yield and trough earnings behind us, we see continued attractive prospects ahead.

We added to CVS Health Corp. (CVS) as it hit a decade low, believing that the problems in the Medicare Advantage business would be sorted out. So far this thesis has played out with 2026 rates showing strong improvement. "

CVS Health Corporation (NYSE:CVS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held CVS Health Corporation (NYSE:CVS) at the end of the fourth quarter, compared to 63 in the third quarter. While we acknowledge the potential of CVS Health Corporation (NYSE:CVS) 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.

In another article, we covered CVS Health Corporation (NYSE:CVS) and shared the list of best stocks that will always grow. In its Q4 2024 investor letter, Patient Capital Opportunity Equity Strategy highlighted CVS Health Corporation's (NYSE:CVS) strategic actions to overcome challenges. 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.