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Should You Hold Tenet Healthcare Corporation (THC)?

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund returned -6.16% (net) compared to a -4.78% return for the Russell 2500 Index. Furthermore, the fund underperformed its secondary benchmark, the Russell 2500 Value Index, which returned -3.66% during the same period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.

Meridian Contrarian Fund highlighted stocks like Tenet Healthcare Corporation (NYSE:THC) in the third quarter 2023 investor letter. Headquartered in Dallas, Texas, Tenet Healthcare Corporation (NYSE:THC) is a diversified healthcare service company. On November 29, 2023, Tenet Healthcare Corporation (NYSE:THC) stock closed at $67.37 per share. One-month return of Tenet Healthcare Corporation (NYSE:THC) was 24.85%, and its shares gained 48.56% of their value over the last 52 weeks. Tenet Healthcare Corporation (NYSE:THC) has a market capitalization of $6.842 billion.

Meridian Contrarian Fund made the following comment about Tenet Healthcare Corporation (NYSE:THC) in its Q3 2023 investor letter:

"Tenet Healthcare Corporation (NYSE:THC) is a top-ten U.S. operator of hospitals, outpatient surgery centers, and healthcare business process services. We initiated our position in Q4 2022 as we believed that the market’s short-term focus on COVID-caused staffing and admissions challenges overshadowed the value of Tenet’s long-term strategy of growing outpatient surgery centers. Outpatient surgery provides a cost-effective and patient-centered level of care that patients prefer and a business model that drives significantly higher returns to Tenet above that of the legacy hospital model. From our original purchase, Tenet’s stock more than doubled in the first half of 2023 as the staffing and admissions issues abated, driving earnings higher. The stock reversed some of its gains in the most recent quarter, as anxieties percolated over the possibility that profitable discretionary surgeries would decline during a possible macro downturn. The stock was also affected by concerns over rising labor costs related to a California nursing strike (since resolved), and a related California minimum wage law proposal. We think the strike concerns are overblown. California represents low double-digit revenues and headcount for Tenet but would only account for a low-single digit hit to earnings even if maximum wage increases were enacted all at once. We continue to maintain our position as Tenet has a long history of navigating tenuous labor situations, and the company’s focus on moving more surgeries to an outpatient setting creates earning paths that could more than counteract any labor concerns and costs."

Tenet Healthcare Corporation (NYSE:THC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Tenet Healthcare Corporation (NYSE:THC) at the end of third quarter which was 74 in the previous quarter.

We discussed Tenet Healthcare Corporation (NYSE:THC) in another article and shared the list of stocks that billionaire Larry Robbins just bought and sold. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.


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