Since the beginning of 2016, the healthcare sector has been one of the worst performing and is down by almost 8.80% year-to-date, outperforming only the financial sector that has registered declines of 9.90%. Nevertheless, smart money investors like healthcare stocks for their long-term growth and the over the past year the sector has also registered a wave of M&A activity, which is another reason for investing in healthcare companies. With the latest round of 13F filings completed, we have analyzed the equity portfolios of around 730 hedge funds and other institutional investors, whose activity we track as part of our small-cap strategy (see more details here). Aside from picking the stocks for our strategy, we can also see the collective sentiment among the funds from our database towards different stocks. Therefore, in this article, we are going to take a look at the top five healthcare stocks that the funds we track were bullish on heading into the first quarter of 2016.
Let’s start with Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), which ranked on the fifth spot after it had registered a substantial increase in popularity during the last quarter of 2015. At the end of December, 81 funds reported long positions in Teva, worth $9.74 billion in aggregate, up from 70 funds holding $6.80 billion worth of stock a quarter earlier. In this way, the investors from our database amassed over 17% of the company’s stock at the end of last year. Year-to-date, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s shares have slid by more than 15%, but investors have something to look forward to in the long run, since the company is currently in the process of acquiring Allergan’s generic drugs business, following which Teva will become the largest manufacturer of generic drugs in the world. At the same time, at 9 times forward earnings, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s stock looks attractive and analysts seem to have the same view, since most outlets that cover the stock have set bullish ratings. Among the funds in our database, billionaire Andreas Halvorsen‘s Viking Global is the largest shareholder of Teva, owning 25.04 million shares.