Is Brighthouse Financial (BHF) a Smart Long-Term Buy?

This post was originally published on this site

Miller Value Partners, an investment management firm, published its ‘Deep Value Strategy’ fourth-quarter 2020 Investor Letter – a copy of which can be seen here. A net return of 64.9% was recorded by the fund for the Q4 of 2020 which is twice as much of its S&P 500 benchmark return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Miller Value Partners, in their Q4 2020 Investor Letter, said that their Brighthouse Financial, Inc. (NASDAQ: BHF) position has been increased during the second half of 2020. Brighthouse Financial, Inc. is a life insurance company that currently has a $3.5 billion market cap. For the past 3 months, BHF delivered a decent 17.99% return and settled at $40 per share at the closing of February 12th.

Here is what Miller Value Partners has to say about Brighthouse Financial, Inc. in their Q4 2020 investor letter:

“In addition, we have recently increased our position size in Brighthouse Financial (BHF), one of the of the largest annuity and life insurance companies in the U.S. Since separating from MetLife, Brighthouse has built strong sales momentum and has focused on building out a new, less capital intensive business. Brighthouse is targeting nearly $9B in annual annuity sales by the end of 2021 (double 2017 levels) and expanding its life insurance businesses by 10x over the same time period. The company is targeting its capital-intensive business to be 18% by 2025 (half of 2016 levels), which should further enhance future cash flow generation. The company’s capital ratios remain strong and well above regulatory requirements. Management is aggressively returning cash to shareholders, targeting a total of $1.5B in share buybacks by the end of 2021 and retiring nearly 1/3 of their outstanding shares. While the market remains concerned about the impact of lower interest rates and their capital-intensive business, we believe the share price is over discounting these concerns and see the potential impact lessening over the coming years. Brighthouse’s equity appears significantly mispriced, closing the year at a greater than 70% discount to book value and a price-to-earnings multiple of 3 times, a significant discount to its peers and the overall market.”

Last November, we published an article telling that Brighthouse Financial, Inc. (NASDAQ: BHF) was in 34 hedge fund portfolios. Its all time high statistics is 43. BHF delivered a 10.48% return YTD.

Our calculations show that Brighthouse Financial, Inc. (NASDAQ: BHF) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

[embedded content]

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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