Given that the latest batch of 13F filings has just been released and collective hedge fund activity can sometimes presage future stock moves, Insider Monkey has compiled a list of healthcare stocks that many smart money funds were abandoning in the third quarter, potentially on the fear that Clinton would win the Presidency. Although the hedge fund activity does not necessarily mean bad things ahead for these stocks, the activity does mean that investors should pay more attention to the stocks.
With that said, let’s examine Allergan plc Ordinary Shares (NYSE:AGN), Shire PLC (ADR) (NASDAQ:SHPG), Aetna Inc (NYSE:AET), Pfizer Inc. (NYSE:PFE), and Adeptus Health Inc (NYSE:ADPT), all of which lost a good deal of hedge fund support last quarter.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Adeptus Health Inc (NYSE:ADPT)
– Number of Hedge Fund Shareholders (as of September 30): 13
– Total Value of Hedge Fund Holdings (as of September 30): $183.86 million
– Hedge Fund Holdings as Percent of Float (as of September 30): 28.20%
According to our database of 742 successful institutions that filed 13Fs for the September quarter, the number of hedge funds with holdings in Adeptus Health Inc (NYSE:ADPT) fell by 11 quarter-over-quarter to 13 at the end of September. Although demand for emergency room services should grow in the future given the aging population, traders have been concerned about Adeptus’ debt. The company’s horrible third-quarter earnings report and weak guidance hasn’t helped either.
Aetna Inc (NYSE:AET)
– Number of Hedge Fund Shareholders (as of September 30): 49
– Total Value of Hedge Fund Holdings (as of September 30): $2.34 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 6.50%
49 funds that we track owned shares of Aetna Inc (NYSE:AET) at the end of the third quarter, down by 12 funds from the end of the second quarter. Those 12 funds may have wished they hadn’t exited Aetna, however, as shares of the health insurer took off after Donald Trump won the Presidency. Given Trump’s anti-regulation and pro-business stance, some traders evidently think that the odds of Aetna’s merger with Humana Inc (NYSE:HUM) getting the green light from regulators have increased. If the merger goes through, Aetna’s management could potentially unlock substantial synergies.
We’ll check out three more healthcare stocks that lost significant hedge fund support during the third quarter.