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Community Health Systems (CYH) In Focus After House Fails to Repeal and Replace Obamacare

Community Health Systems (NYSE:CYH) is in the spotlight after the ‘American Health Care Act’, which would have replaced Obamacare, failed to muster enough support to bring a vote in the House of Representatives on Friday. Not surprisingly, shares of Community Health Systems (NYSE:CYH), which operates hospitals and outpatient facilities that generally benefit from more healthcare coverage (and Obamacare), rallied 9.66% in the week’s last session. In this article, let’s examine elite fund sentiment toward Community Health Systems (NYSE:CYH) using 13F data and look deeper into the effects that Friday’s events could have on the stock.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

According to our data, sentiment in Community Health has been stable. Of the 742 top funds in our database, 37 were long Community Health Systems (NYSE:CYH) at the end of December, unchanged from that of the previous quarter. Specifically, the top two elite holders, Glenn Russell Dubin‘s Highbridge Capital Management and Brian Taylor‘s Pine River Capital Management both kept their stakes the same quarter over quarter at 10 million and 5.3 million shares, respectively.

What’s Next?

Due to Obamacare generally increasing overall expenditures on healthcare and by extension, hospitals and outpatient services, Community Health Systems (NYSE:CYH) benefits from the entitlement program. If President Trump lets Obamacare do what he says in the following tweet, ‘ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE’, Community Health Systems (NYSE:CYH) arguably has more time to right its fundamentals and to sell off assets at presumably higher valuations than before to deleverage. How long Friday’s event buys Community Health Systems (NYSE:CYH) and how well Community Health Systems (NYSE:CYH) management executes, controls costs, and gets top dollar for its planned divested assets will ultimately decide if Community Health Systems (NYSE:CYH)’s rally can continue in the long term. As it stands, some analysts think Community Health Systems (NYSE:CYH)’s high leverage might be one reason why PE funds/Chinese investors haven’t put a bid to take the company private. That being said, the stock is definitely one to watch, particularly since top shareholder Tianqiao Chen and Shanda recently went active according to SEC filings.

Disclosure:None

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wavebreakmedia/Shutterstock.com