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Hedge Funds Are Crazy About WellCare Health Plans, Inc. (WCG)

Is WellCare Health Plans, Inc. (NYSE:WCG) a buy?

In the eyes of many of your peers, hedge funds are assumed to be delayed, old investment vehicles of a forgotten age. Although there are In excess of 8,000 hedge funds trading in present day, this site looks at the elite of this club, around 525 funds. It is widely held that this group has its hands on the majority of all hedge funds’ total assets, and by watching their highest quality investments, we’ve revealed a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy beat 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as crucial, bullish insider trading sentiment is another way to analyze the financial markets. Just as you’d expect, there are a number of reasons for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the impressive potential of this method if “monkeys” know what to do (learn more here).

Thus, let’s study the newest info surrounding WellCare Health Plans, Inc. (NYSE:WCG).

What have hedge funds been doing with WellCare Health Plans, Inc. (NYSE:WCG)?

Heading into Q3, a total of 29 of the hedge funds we track were long in this stock, a change of 32% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially.

WellCare Health Plans, Inc. (NYSE:WCG)Out of the hedge funds we follow, Daruma Asset Management, managed by Mariko Gordon, holds the most valuable position in WellCare Health Plans, Inc. (NYSE:WCG). Daruma Asset Management has a $71.9 million position in the stock, comprising 3.5% of its 13F portfolio. The second largest stake is held by Richard S. Pzena of Pzena Investment Management, with a $43.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that are bullish include Jacob Gottlieb’s Visium Asset Management, Paul Reeder and Edward Shapiro’s PAR Capital Management and Samuel Isaly’s OrbiMed Advisors.

Consequently, specific money managers have jumped into WellCare Health Plans, Inc. (NYSE:WCG) headfirst. Daruma Asset Management, managed by Mariko Gordon, created the most outsized position in WellCare Health Plans, Inc. (NYSE:WCG). Daruma Asset Management had 71.9 million invested in the company at the end of the quarter. Richard S. Pzena’s Pzena Investment Management also made a $43.6 million investment in the stock during the quarter. The following funds were also among the new WCG investors: Jacob Gottlieb’s Visium Asset Management, Samuel Isaly’s OrbiMed Advisors, and Paul ReederáandáEdward Shapiro’s PAR Capital Management.

How have insiders been trading WellCare Health Plans, Inc. (NYSE:WCG)?

Insider buying is best served when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, WellCare Health Plans, Inc. (NYSE:WCG) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

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

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