Is there a right way to invest? Not really. Each person has their own individual style, but what ultimately matters are the results. This holds especially true in the realm of investing, where even the most successful stock pickers on Wall Street employ diverse strategies to achieve their goals. And what are those goals? Big returns, of course.
Take billionaires Steve Cohen and Ken Griffin, for example. Both have had incredible careers, but each’s route to riches has been distinct. Griffin, who runs the Citadel hedge fund, adheres to quantitative investment methods, while Cohen, who leads the Point72 asset management firm, is famous for his high-risk/high-reward strategy.
That doesn’t mean their stock choices will never cross paths. In fact, some specific equities make up a part of each’s respective portfolios. And if two investing gurus feel strongly about the same names, it’s only natural for investors to get curious as to why they’re both invested.
According to TipRanks’ database, the analyst community believes two stocks the billionaires recently added to their funds represent compelling plays. Both picks have earned “Strong Buy” consensus ratings.
Let’s check the details.
Humana Inc. (HUM)
Humana Inc. (HUM) is an American healthcare giant that operates in the healthcare segment, which is considered a resilient sector during uncertain times. The company is a leading provider of health insurance plans and related services, offering a wide range of products such as individual and group plans, Medicare Advantage, and prescription drug plans.
With its headquarters in Louisville, Kentucky, Humana is one of the largest managed care organizations in the U.S., serving millions of customers and having a market capitalization of over $64 billion. Humana’s strong performance in the first quarter further solidified its value proposition.
The company reported a revenue increase of 11.6% year-over-year to $26.74 billion, surpassing the forecast by $340 million. Additionally, its adjusted earnings per share (EPS) of $9.38 exceeded analysts’ expectations of $9.20.
Humana also reaffirmed its target for 2023 individual Medicare Advantage (MA) membership growth, aiming for at least 775,000 new members, representing a 17% increase compared to the previous fiscal year and outpacing industry growth.
Prominent investors such as Cohen and Griffin demonstrated their confidence in Humana during the first quarter. Griffin significantly increased his stake in HUM by 2,216%, acquiring 973,754 shares and now holding a total of 1,017,699 shares valued at $522.4 million.
Cohen also entered a new position, purchasing 189,079 shares of HUM, which currently have a market value of $97 million. Morgan Stanley’s Michael Ha echoes the optimism surrounding Humana, emphasizing the company’s growth prospects as a key factor in his investment thesis.
Ha maintains an Overweight (Buy) rating on the stock and sets a price target of $637, implying a 24% growth potential over the next 12 months. The overall sentiment among analysts is overwhelmingly positive, with 15 out of 16 recent reviews being favorable, resulting in a Strong Buy consensus. The average target price of $609.33 indicates a premium of approximately 19% from the current price.
Cousins Properties (CUZ)
Cousins Properties (CUZ) is a real estate investment trust (REIT) that offers a safe investment option, especially during uncertain times. REITs are known for providing attractive dividends. Cousins Properties, backed by Cohen and Griffin, is a prominent player in this industry.
Established in 1958, Cousins Properties has a strong presence as an owner, operator, and developer of high-quality office properties. Their focus is on acquiring, developing, and managing Class-A office buildings in key markets across the Sunbelt region. Their portfolio includes various assets, such as corporate headquarters, urban office towers, and suburban office parks.
Despite concerns about the commercial property market in the United States, Cousins Properties had an impressive performance in the latest reported quarter (1Q23). They achieved revenue of $202.73 million, an 8.5% increase compared to the previous year, surpassing the forecast by $7.64 million.
Additionally, their funds from operations (FFO) reached $0.65 per share, slightly exceeding the consensus estimate of $0.63. Cousins Properties also offers a regular dividend, currently valued at $0.32 per share, providing a substantial yield of 6.46%, which beats inflation.
Cohen and Griffin find these aspects appealing and have shown their confidence by investing in the company. Cohen purchased 1,071,615 shares worth over $23.1 million, while Griffin acquired an even larger position with 3,257,081 shares, bringing his total holdings to 3,295,280 shares valued at an impressive $71 million.
Baird analyst Wes Golladay is also impressed by Cousins Properties and believes the company is well-positioned to navigate the current macroeconomic challenges faced by the sector. Golladay notes that Cousins Properties’ late-stage leasing pipeline has doubled to 700,000 square feet, including activity at the Neuhoff development in Nashville. The pipeline, combined with 480,000 square feet of signed deals scheduled to commence this year, will contribute to higher occupancy rates. Furthermore, Cousins Properties’ strong balance sheet allows them to take advantage of market dislocations and add to their portfolio in the Sun Belt region.
Based on his analysis, Golladay rates CUZ shares as Outperform (Buy) with a price target of $27. If achieved, this target implies a 25% return for investors within a year.
Overall, CUZ has received positive reviews from 7 analysts in recent months, with 6 Buy ratings and 1 Hold, resulting in a Strong Buy consensus. The average price target of $25.29 suggests a 17% upside from the current trading price of $21.56.