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Cardinal Health, Inc. (NYSE:CAH): Are Hedge Funds Right About This Stock?

Cardinal Health, Inc. (NYSE:CAH) has seen a decrease in hedge fund sentiment of late.

In today’s marketplace, there are tons of gauges shareholders can use to monitor their holdings. A pair of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a solid amount (see just how much).

Cardinal Health, Inc.

Equally as key, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are plenty of incentives for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if investors know where to look (learn more here).

Keeping this in mind, let’s take a glance at the key action surrounding Cardinal Health, Inc. (NYSE:CAH).

Hedge fund activity in Cardinal Health, Inc. (NYSE:CAH)

In preparation for this year, a total of 29 of the hedge funds we track were long in this stock, a change of -9% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly.

According to our comprehensive database, Larry Robbins’s Glenview Capital had the most valuable position in Cardinal Health, Inc. (NYSE:CAH), worth close to $144 million billion, comprising 2% of its total 13F portfolio. On Glenview Capital’s heels is Andreas Halvorsen of Viking Global, with a $88 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jonathon Jacobson’s Highfields Capital Management, Clint Carlson’s Carlson Capital and D. E. Shaw’s D E Shaw.

Judging by the fact that Cardinal Health, Inc. (NYSE:CAH) has faced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers that decided to sell off their full holdings last quarter. At the top of the heap, James E. Flynn’s Deerfield Management dumped the biggest position of all the hedgies we key on, comprising close to $16 million in call options, and Donald Chiboucis of Columbus Circle Investors was right behind this move, as the fund dumped about $7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.

How are insiders trading Cardinal Health, Inc. (NYSE:CAH)?

Insider trading activity, especially when it’s bullish, is most useful when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, Cardinal Health, Inc. (NYSE:CAH) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

With the results shown by the aforementioned time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Cardinal Health, Inc. (NYSE:CAH) is an important part of this process.

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.