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Hedge Funds Are Dumping Aetna Inc. (AET)

Does Aetna Inc. (NYSE:AET) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Aetna Inc. (NYSE:AET) was in 49 hedge funds’ portfolios at the end of September. AET investors should be aware of a decrease in hedge fund interest lately. There were 61 hedge funds in our database with AET positions at the end of the previous quarter. At the end of this article we will also compare AET to other stocks including General Dynamics Corporation (NYSE:GD), General Mills, Inc. (NYSE:GIS), and McKesson Corporation (NYSE:MCK) to get a better sense of its popularity.

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Now, let’s review the new action encompassing Aetna Inc. (NYSE:AET).

Hedge fund activity in Aetna Inc. (NYSE:AET)

At Q3’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Larry Robbins’ Glenview Capital has the largest position in Aetna Inc. (NYSE:AET), worth close to $598 million, corresponding to 4.3% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $243.7 million position; 0.4% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Daniel S. Och’s OZ Management, Jim Simons’ Renaissance Technologies and Ric Dillon’s Diamond Hill Capital.

Because Aetna Inc. (NYSE:AET) has witnessed falling interest from hedge fund managers, logic holds that there is a sect of hedgies that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP said goodbye to the biggest stake of the 700 funds watched by Insider Monkey, totaling an estimated $122.1 million in stock, and Andreas Halvorsen’s Viking Global was right behind this move, as the fund sold off about $117.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 12 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Aetna Inc. (NYSE:AET). We will take a look at General Dynamics Corporation (NYSE:GD), General Mills, Inc. (NYSE:GIS), McKesson Corporation (NYSE:MCK), and Automatic Data Processing (NASDAQ:ADP). All of these stocks’ market caps are similar to AET’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GD 40 7209138 -11
GIS 33 607256 4
MCK 59 1502964 -7
ADP 32 817244 -2

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2.53 billion. That figure was $2.34 billion in AET’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Automatic Data Processing (NASDAQ:ADP) is the least popular one with only 32 bullish hedge fund positions. Aetna Inc. (NYSE:AET) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MCK might be a better candidate to consider a long position.

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