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Should You Avoid Health Management Associates Inc (HMA)?

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Health Management Associates Inc (NYSE:HMA) has experienced a decrease in enthusiasm from smart money in recent months.

If you’d ask most investors, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, we choose to focus on the aristocrats of this club, around 450 funds. It is estimated that this group controls the majority of all hedge funds’ total asset base, and by monitoring their highest performing picks, we have discovered a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as important, optimistic insider trading activity is another way to parse down the financial markets. As the old adage goes: there are a variety of reasons for an insider to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this tactic if “monkeys” understand what to do (learn more here).

With all of this in mind, it’s important to take a gander at the key action encompassing Health Management Associates Inc (NYSE:HMA).

How have hedgies been trading Health Management Associates Inc (NYSE:HMA)?

Heading into Q2, a total of 21 of the hedge funds we track held long positions in this stock, a change of -9% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

Health Management Associates Inc (NYSE:HMA)According to our comprehensive database, Glenview Capital, managed by Larry Robbins, holds the largest position in Health Management Associates Inc (NYSE:HMA). Glenview Capital has a $485.9 million position in the stock, comprising 5.1% of its 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $28.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Charles Clough’s Clough Capital Partners and Don Morgan’s Brigade Capital.

Because Health Management Associates Inc (NYSE:HMA) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies who were dropping their entire stakes in Q1. At the top of the heap, Stephen DuBois’s Camber Capital Management dropped the largest position of all the hedgies we monitor, valued at close to $41.9 million in stock., and Gabe Hoffman of Accipiter Capital Management was right behind this move, as the fund sold off about $25.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds in Q1.

How have insiders been trading Health Management Associates Inc (NYSE:HMA)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, Health Management Associates Inc (NYSE:HMA) has seen 2 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Health Management Associates Inc (NYSE:HMA). These stocks are Select Medical Holdings Corporation (NYSE:SEM), Universal Health Services, Inc. (NYSE:UHS), Tenet Healthcare Corp (NYSE:THC), LifePoint Hospitals, Inc. (NASDAQ:LPNT), and Community Health Systems (NYSE:CYH). All of these stocks are in the hospitals industry and their market caps are similar to HMA’s market cap.

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