Hedge Funds Are Selling UnitedHealth Group Inc. (UNH)

Is UnitedHealth Group Inc. (NYSE:UNH) a buy here? The smart money is getting less bullish, but interestingly, UBS says otherwise. The financial services company issued a “Buy” this morning on UNH, despite the fact that the number of long hedge funds shrank last quarter. See the details here.

In today’s marketplace, there are dozens of indicators investors can use to monitor the equity markets. Two of the best are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outpace the market by a solid margin (see just how much).

Equally as beneficial, optimistic insider trading sentiment is a second way to break down the investments you’re interested in. There are plenty of reasons for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the latest action surrounding UnitedHealth Group Inc. (NYSE:UNH).

What have hedge funds been doing with UnitedHealth Group Inc. (NYSE:UNH)?

At the end of the fourth quarter, a total of 52 of the hedge funds we track were long in this stock, a change of -2% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Eagle Capital Management, managed by Boykin Curry, holds the most valuable position in UnitedHealth Group Inc. (NYSE:UNH). Eagle Capital Management has a $532 million position in the stock, comprising 3.8% of its 13F portfolio. The second largest stake is held by Orbis Investment Management, managed by William B. Gray, which held a $261 million position; 1.7% of its 13F portfolio is allocated to the company. Some other peers Bill Millerthat hold long positions include Jonathon Jacobson’s Highfields Capital Management, Bill Miller’s Legg Mason Capital Management and Paul Reeder and Edward Shapiro’s PAR Capital Management.

Due to the fact that UnitedHealth Group Inc. (NYSE:UNH) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there were a few funds that elected to cut their positions entirely last quarter. Intriguingly, Rob Citrone’s Discovery Capital Management sold off the biggest investment of all the hedgies we key on, totaling close to $122 million in stock., and Dan Loeb of Third Point was right behind this move, as the fund dumped about $111 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

What do corporate executives and insiders think about UnitedHealth Group Inc. (NYSE:UNH)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, UnitedHealth Group Inc. (NYSE:UNH) has seen 1 unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to UnitedHealth Group Inc. (NYSE:UNH). These stocks are Humana Inc (NYSE:HUM), Aetna Inc. (NYSE:AET), CIGNA Corporation (NYSE:CI), WellPoint, Inc. (NYSE:WLP), and Express Scripts Holding Company (NASDAQ:ESRX). This group of stocks belong to the health care plans industry and their market caps match UNH’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Humana Inc (NYSE:HUM) 41 0 4
Aetna Inc. (NYSE:AET) 45 1 8
CIGNA Corporation (NYSE:CI) 37 1 6
WellPoint, Inc. (NYSE:WLP) 43 0 6
Express Scripts Holding Company (NASDAQ:ESRX) 74 1 2

With the results shown by Insider Monkey’s research, retail investors must always monitor hedge fund and insider trading sentiment, and UnitedHealth Group Inc. (NYSE:UNH) is no exception.

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