Hedge Funds Were Right About Humana Inc (HUM)

Larry Robbins’ Glenview Capital had both Aetna Inc and Humana in its portfolio towards the end of the first quarter. His stake in Aetna included 3.53 million shares valued at $375.77 million, whereas his stake in Humana was comparatively bigger, including 5.02 million shares having a market value of $893.04 million. Cliff Assness’ AQR Capital Management along with Phil Gross & Robert Atchinson’s Adage Capital Management are two other hedge funds maintaining positions in both of the insurers. Cliss Asness owned 3.12 million shares of Aetna Inc (NYSE:AET) worth $332.75 million and 1.93 million shares of Humana with aggregate value of $344.46 million.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 135% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details). These filings also give us insight into other signals the smart money is giving off, and we share these signals with readers whenever we spot them.

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