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This Metric Says You Are Smart to Sell UnitedHealth Group Inc. (NYSE:UNH)

Is UnitedHealth Group Inc. (NYSE:UNH) a healthy stock for your portfolio? The best stock pickers are becoming less hopeful. The number of long hedge fund positions fell by 1 lately.

According to most traders, hedge funds are seen as slow, old investment vehicles of the past. While there are over 8000 funds with their doors open at the moment, we hone in on the moguls of this club, around 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by monitoring their highest performing stock picks, we have revealed a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

UnitedHealth Group IncJust as key, optimistic insider trading activity is another way to break down the stock market universe. As the old adage goes: there are plenty of stimuli for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

Now, we’re going to take a peek at the latest action encompassing UnitedHealth Group Inc. (NYSE:UNH).

What have hedge funds been doing with UnitedHealth Group Inc. (NYSE:UNH)?

Heading into 2013, a total of 52 of the hedge funds we track held long positions in this stock, a change of -2% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Boykin Curry’s Eagle Capital Management had the largest position in UnitedHealth Group Inc. (NYSE:UNH), worth close to $532 million, accounting for 3.8% of its total 13F portfolio. On Eagle Capital Management’s heels is William B. Gray of Orbis Investment Management, with a $261 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Jonathon Jacobson’s Highfields Capital Management, Bill Miller’s Legg Mason Capital Management and Paul ReederáandáEdward Shapiro’s PAR Capital Management.

Due to the fact that UnitedHealth Group Inc. (NYSE:UNH) has faced a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds who were dropping their positions entirely at the end of the year. Interestingly, Rob Citrone’s Discovery Capital Management said goodbye to the largest investment of all the hedgies we track, totaling about $122 million in stock.. Dan Loeb’s fund, Third Point, also dropped its stock, about $111 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds at the end of the year.

How have insiders been trading UnitedHealth Group Inc. (NYSE:UNH)?

Insider buying is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time period, UnitedHealth Group Inc. (NYSE:UNH) has experienced 1 unique insiders buying, and 8 insider sales (see the details of insider trades here).

With the results demonstrated by our time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and UnitedHealth Group Inc. (NYSE:UNH) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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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