Schafer Cullen’s Q3 Letter Cites Health-Care Drag and Sells Sempra After California Rate Ruling

Overview

• SCCM reported Q3 returns of 6.9% gross and 6.8% net, bringing year-to-date performance to 13.0% versus 11.7% for the Russell 1000 Value and 14.8% for the S&P 500.
• The firm said stock selection in Health Care weighed on results, with Cigna trading lower despite a modest beat as its medical loss ratio rose to 83.2% and commercial membership softened.
• Bristol-Myers beat expectations but cut EPS guidance due to one-time R&D charges and loss-of-exclusivity pressures, with management emphasizing portfolio realignment and cost discipline.
• Sempra was sold after its Southern California utilities received lower-than-requested rates in a key decision and as the stock’s P/E rose to about 20x from 16x at purchase, outweighing Texas growth.
• SCCM also exited Kenvue on a less compelling 2025 valuation and operational headwinds, and noted Consumer Staples underperformance as Mondelez fell on higher cocoa costs tied to West Africa supply concerns.