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Actavis plc (ACT), Allergan, Inc. (AGN), Pfizer Inc. (PFE): Hedge Funds Betting Big on Healthcare Stocks

One of the sectors that has benefited from the highest returns over the years is Healthcare. It has the highest returns year-to-date appreciating by 19%, outrunning utilities and technology with 16% and 14% respectively. In this way during the third quarter has witnessed an increase in activity by many hedge funds among those that we track at Insider Monkey. It was especially related with several important M&A deals that have been announced recently. With this in mind, we have compiled a list of five most popular healthcare stocks, by analyzing the data from the latest 13F filings of over 700 funds that we track at Insider Monkey.

Herbalife, is HLF a good stock to buy, Bill Ackman, Karen Finerman

In this way on the top two positions came Actavis plc (NYSE:ACT) and Allergan, Inc. (NYSE:AGN), two companies that have recently announced a deal under the terms of which Actavis plc (NYSE:ACT) will acquire Allergan, Inc. (NYSE:AGN) for $66 billion. During the third quarter, the number of hedge funds holding shares of Actavis went up by 5 to 118, while the aggregate value of the stakes held by these funds went up to $13.04 billion, from $9.19 billion. However, the possibility of a deal between Actavis plc (NYSE:ACT) and Allergan, Inc. (NYSE:AGN) was not disclosed until recently, but Actavis has always been a popular healthcare stock among hedge funds. Daniel Och’s OZ Management is one of the investors bullish on Actavis plc (NYSE:ACT). During the third quarter, the fund raised its stake by 1.65 million shares to 4.83 million shares, valued at $1.17 billion.

On the other hand, the popularity of Allergan, Inc. (NYSE:AGN) is closely related to a possibility of a takeover. As you know, during the second quarter, Bill Ackman‘s Pershing Square together with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) made an unsolicited bid to acquire Allergan, but their bids have been rejected, which sparked a proxy fight between both parties. In this way, the number of funds that own shares of Allergan, Inc. (NYSE:AGN) went up during the second quarter, but as the proxy war progressed without any major developments that would suggest a takeover, during the third quarter, the number of funds bullish on the company declined by 8 to 100 funds, while the aggregate value of their stakes fell by $143.21 million to $13.54 billion. Neverheless, the investors that stuck with Allergan stroke gold, since Actavis plc (NYSE:ACT)’s bid is much higher than the previous offer from Valeant. One of the largest shareholders of Allergan, Inc. (NYSE:AGN) is Pershing Square, which prior to expressing its intent to acquire the company, disclosed a significant position and owns 28.88 million shares, valued at $5.15 billion as of the end of September.

Pfizer Inc. (NYSE:PFE) is next on the list, with 91 funds reporting long positions, versus 87 in the previous quarter. However, the aggregate value of the positions held by these funds declined to $5.02 billion, from $5.38 billion. One of the shareholders of Pfizer Inc. (NYSE:PFE) is Ken Fisher‘s Fisher Asset Management, which inched up its position by 220,000 shares to 31.70 million shares, valued at $937.44 million. Moreover, David Shaw‘s D.E. Shaw boosted its stake during the July-September period by 8.72 million shares to 10.27 million shares, worth $303.68 million.

While the first three stocks have been pharmaceutical companies, on the fourth position is HCA Holdings Inc (NYSE:HCA), a $29 billion operator of hospitals and other healthcare entities. The company has witnessed the number of funds betting on it going up to 90 from 87 during the third quarter. These funds own a total of $5.78 billion worth of HCA Holdings Inc (NYSE:HCA)’s stock, up by $797.62 million over the quarter. One of the top shareholders of HCA Holdings is Larry Robbins’ Glenview Capital Management. The fund trimmed its stake by 2.25 million shares and reported ownership of 9.61 million shares, valued at $666.74 million in its latest 13F filing. In addition, Andreas Halvorsen‘s Viking Global initiated a $126.57 million stake during the third quarter and owns 1.79 million shares of HCA Holdings Inc (NYSE:HCA) as of the end of September.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has been mentioned already in connection with its failed plans to acquire Allergan. At the end of the third quarter, the number of funds holding shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) declined by 7 to 89, and the aggregate value of the stakes fell by $2.13 billion to $10.81 billion. Jeff Ubben‘s ValueAct Capital Management is one of the largest shareholders of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), owning 18.92 million shares, valued at $2.48 billion. Moreover, Valeant represents the second-larges position in ValueAct’s equity portfolio, and Jeffrey Ubben has recently been appointed to the company’s board of directors.

Disclosure: none

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