Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds’ Favorite Medical Care Stocks

Page 1 of 2

During times of economic uncertainty or extreme volatility in the markets, medical care stocks usually perform much better than their counterparts in other industries. The reason behind that outperformance is simple – economic conditions and macro factors don’t weigh heavily on the financials of medical care companies. Regardless of which phase in economic life cycle we find ourselves in, unfortunately, there will always be people spending on medical care to recover from an injury or illness. This spending ensures that medical care companies are able to generate stable cash flows year after year. Since most investors – both big and small – love companies with stable cash flows, medical care stocks as a group never go out of fashion. However, some stocks within that space do end up getting more popular than others as times change. Taking that into account, we at Insider Monkey come up with a list of the most popular medical care stocks among the over 800 hedge funds covered by us. Read further, to know which were the five medical care stocks that topped our list this time around.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

Tyler Olson/Shutterstock.com

Tyler Olson/Shutterstock.com

#5 VCA Inc (NASDAQ:WOOF)

 – Investors with long positions (as of March 31): 33

– Aggregate value of investors’ holdings (as of March 31): $697.45 million

Let’s start with VCA Inc (NASDAQ:WOOF), which saw a marginal decline in its popularity among hedge funds during the first quarter with the number of funds covered by us long the stock inching down by one and the aggregate value of their holdings in it dropping by 7.5%. Funds that upped their stake in the company during that period included billionaire David E. Shaw‘s firm, D.E. Shaw, which increased its holding in the company by 10% to 1.36 million shares. Shares of the animal healthcare company have been on a strong uptrend since the beginning of 2013. Though they  corrected a bit at the start of 2016, they have again resumed their uptrend and are currently trading up by around 18% year-to-date. Some analysts who cover the stock feel that it has become expensive and are advising investors to wait for a pullback in the stock before buying it. On May 3, the company completed its acquisition of 80% ownership stake in Companion Animal Practices, which it had announced this year in February.

Follow Vca Inc (NASDAQ:WOOF)
Trade (NASDAQ:WOOF) Now!

#4 Tenet Healthcare Corp (NYSE:THC)

 – Investors with long positions (as of March 31): 34

– Aggregate value of investors’ holdings (as of March 31): $887.08 million

The almost 50% decline in Tenet Healthcare Corp (NYSE:THC)’s stock during the second-half of 2015 spooked hedge funds. Its effect was felt during the first quarter of this year as well, when the ownership of the company among funds covered by us declined by three and the aggregate value of their holdings in it shrank by $110.5 million. So far in 2016, Tenet Healthcare Corp (NYSE:THC)’s stock has lost over 4% of its value, which to a large extent can be attributed to the decline it saw recently after a federal judge deemed the Obama administration spending money to reimburse health insurers as unconstitutional. The stock is currently trading at forward P/E of 11.95, which analysts believe is a reasonable valuation considering the headwinds the company faces. Larry Robbins‘ Glenview Capital didn’t make any changes to its stake of 17.89 million shares of Tenet Healthcare Corp during the first quarter and continued to remain the largest shareholder of the company among funds covered by us at the end of that period.

Follow Tenet Healthcare Corp (NYSE:THC)
Trade (NYSE:THC) Now!

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!