Health Net, Inc. (HNT): Are Hedge Funds Right About This Stock?

Now, according to many market players, hedge funds are assumed to be delayed, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation today, this site looks at the bigwigs of this group, close to 525 funds. It is widely held that this group has its hands on most of the hedge fund industry’s total assets, and by watching their highest performing equity investments, we’ve found a few investment strategies that have historically outperformed the S&P 500. 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as crucial, positive insider trading sentiment is a second way to analyze the marketplace. Obviously, there are a number of motivations for an insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this tactic if you know what to do (learn more here).

Furthermore, let’s examine the recent info surrounding Health Net, Inc. (NYSE:HNT).

How are hedge funds trading Health Net, Inc. (NYSE:HNT)?

Heading into Q3, a total of 25 of the hedge funds we track held long positions in this stock, a change of 25% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.

Health Net, Inc. (NYSE:HNT)When using filings from the hedgies we track, David Cohen and Harold Levy’s Iridian Asset Management had the biggest call position in Health Net, Inc. (NYSE:HNT), worth close to $636.4 million, comprising 8% of its total 13F portfolio. On Iridian Asset Management’s heels is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $247.3 million position; 3.1% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Natixis Global Asset Management’s Harris Associates, Christopher Medlock James’s Partner Fund Management and D. E. Shaw’s D E Shaw.

As one would understandably expect, certain money managers were leading the bulls’ herd. Iridian Asset Management, managed by David Cohen and Harold Levy, established the most outsized call position in Health Net, Inc. (NYSE:HNT). Iridian Asset Management had 636.4 million invested in the company at the end of the quarter. David Cohen and Harold Levy’s Iridian Asset Management also made a $247.3 million investment in the stock during the quarter. The following funds were also among the new HNT investors: Christopher Medlock James’s Partner Fund Management, D. E. Shaw’s D E Shaw, and Thomas Ellis and Todd Hammer’s North Run Capital.

Insider trading activity in Health Net, Inc. (NYSE:HNT)

Insider buying made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the latest half-year time period, Health Net, Inc. (NYSE:HNT) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Health Net, Inc. (NYSE:HNT). These stocks are Coventry Health Care, Inc. (NYSE:CVH), Magellan Health Services Inc (NASDAQ:MGLN), Molina Healthcare, Inc. (NYSE:MOH), WellCare Health Plans, Inc. (NYSE:WCG), and Centene Corp (NYSE:CNC). This group of stocks are in the health care plans industry and their market caps resemble HNT’s market cap.