Is Universal Health Services, Inc. (UHS) A Good Stock To Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Universal Health Services, Inc. (NYSE:UHS) in this article.

Universal Health Services, Inc. (NYSE:UHS) was in 44 hedge funds’ portfolios at the end of the third quarter of 2015. UHS has seen a decrease in enthusiasm from smart money lately. There were 50 hedge funds in our database with UHS holdings at the end of the previous quarter. At the end of this article we will also compare UHS to other stocks including CarMax, Inc (NYSE:KMX), Akamai Technologies, Inc. (NASDAQ:AKAM), and Macerich Co (NYSE:MAC) to get a better sense of its popularity.

Now, we’re going to take a peek at the key action regarding Universal Health Services, Inc. (NYSE:UHS).

Hedge fund activity in Universal Health Services, Inc. (NYSE:UHS)

Heading into Q4, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Glenview Capital, managed by Larry Robbins, holds the biggest position in Universal Health Services, Inc. (NYSE:UHS). Glenview Capital has a $120.4 million position in the stock, comprising 0.6% of its 13F portfolio. Sitting at the No. 2 spot is Maverick Capital, managed by Lee Ainslie, which holds a $113.3 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain David Stemerman’s Conatus Capital Management, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.

Seeing as Universal Health Services, Inc. (NYSE:UHS) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers that elected to cut their positions entirely heading into Q4. Intriguingly, Andreas Halvorsen’s Viking Global dumped the biggest investment of the 700 funds followed by Insider Monkey, totaling close to $173.5 million in stock, and Jacob Doft’s Highline Capital Management was right behind this move, as the fund said goodbye to about $122.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 6 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Universal Health Services, Inc. (NYSE:UHS) but similarly valued. We will take a look at CarMax, Inc (NYSE:KMX), Akamai Technologies, Inc. (NASDAQ:AKAM), Macerich Co (NYSE:MAC), and Plains All American Pipeline, L.P. (NYSE:PAA). All of these stocks’ market caps are closest to UHS’s market cap.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $594 million. That figure was $1,040 million in UHS’s case. Akamai Technologies, Inc. (NASDAQ:AKAM) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Universal Health Services, Inc. (NYSE:UHS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio despite the slight drop in the total number of elite funds long the stock.