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How Did Hedge Funds’ Favourite Healthcare Stocks Perform during Q2?

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Healthcare stocks, along with food and drink-related securities, are usually recommended as defensive holdings for recessions and bear markets, as individuals have to eat, drink and take medicine even amid economic hardship. Even so, the U.S. healthcare sector has turned out to be much more than a simple defensive investment strategy.

For instance, the Health Care Select Sector SPDR Fund (XLV), the largest exchange-traded fund in the health care sector, has returned nearly 101% over the past five years, versus the 56% return of the S&P 500 Index over the same time span. Meanwhile, the health care sector is anticipated to report the second-highest revenue growth of all ten sectors within the S&P 500 gauge for the second quarter, with the top line growth expected to reach 7.7%. Having this in mind, let’s have a look at the performance of five healthcare stock favored by the hedge fund industry tracked by Insider Monkey, as well as discuss the most important events that affected the performance of each of the five companies to date.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

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#5. Walgreens Boots Alliance Inc. (NASDAQ:WBA)

– Investors with long positions as of March 31: 72

– Aggregate value of investors’ holdings as of March 31: $5.29 Billion

– Q2 Return: -0.7%

There were 72 hedge fund vehicles followed by Insider Monkey with long positions in Walgreens Boots Alliance Inc. (NASDAQ:WBA) at the end of the March quarter, as compared to 78 registered at the end of the previous quarter. The money managers invested in WBA hoarded up almost 6% of the company’s total number of outstanding shares. WBA shares were down a little less than 1% in the second quarter of 2016, partially owing to the United Kingdom’s decision to leave the European Union earlier this month. The global pharmacy-led health and wellbeing enterprise has significant exposure to the U.K. after Walgreens acquired Boots Alliance, the biggest drugstore chain on the island, several years ago. In late October 2015, WBA inked a deal to acquire the third-largest drugstore in the United States, Rite Aid Corporation (NYSE:RAD). The acquisition of the drugstore chain with 4,560 stores across 31 states and the District of Columbia is anticipated to close in the second half of this year. Barry Rosenstein’s JANA Partners owned 10.58 million shares of Walgreens Boots Alliance Inc. (NASDAQ:WBA) at the end of March.

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