Here is What Hedge Funds Think About Humana Inc (NYSE:HUM)

Humana Inc (NYSE:HUM) was in 41 hedge funds’ portfolio at the end of December. HUM has experienced a decrease in enthusiasm from smart money of late. There were 44 hedge funds in our database with HUM holdings at the end of the previous quarter.

To most market participants, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are more than 8000 funds in operation at present, we look at the elite of this group, around 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total capital, and by watching their highest performing stock picks, we have found a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Humana Inc (NYSE:HUM)

Equally as important, positive insider trading sentiment is another way to break down the investments you’re interested in. As the old adage goes: there are a variety of stimuli for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this strategy if piggybackers know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the recent action encompassing Humana Inc (NYSE:HUM).

What have hedge funds been doing with Humana Inc (NYSE:HUM)?

At the end of the fourth quarter, a total of 41 of the hedge funds we track held long positions in this stock, a change of -7% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Orbis Investment Management, managed by William B. Gray, holds the biggest position in Humana Inc (NYSE:HUM). Orbis Investment Management has a $483 million billion position in the stock, comprising 4.8% of its 13F portfolio. Coming in second is Andreas Halvorsen of Viking Global, with a $242 million position; 1.9% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Larry Robbins’s Glenview Capital, Paul ReederáandáEdward Shapiro’s PAR Capital Management and Jeffrey Tannenbaum’s Fir Tree.

Because Humana Inc (NYSE:HUM) has witnessed a declination in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their positions entirely last quarter. Interestingly, Doug Silverman’s Senator Investment Group said goodbye to the largest position of the 450+ funds we monitor, comprising close to $70 million in call options, and David Einhorn of Greenlight Capital was right behind this move, as the fund sold off about $55 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.

What have insiders been doing with Humana Inc (NYSE:HUM)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, Humana Inc (NYSE:HUM) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

With the results demonstrated by our research, everyday investors should always pay attention to hedge fund and insider trading activity, and Humana Inc (NYSE:HUM) is no exception.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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