Insider Monkey has been keenly following the moves of the more than 700 hedge funds in our database, analyzing the entirety of their submitted 13F filings for the reporting period of June 30, and using the data to produce a series of informative reports. Such analytics are shared with our readers to aid them in making investment decisions. Some of the articles we have published on our website include hedge funds’ favorite consumer services stocks among several others. In this article, however, we focus solely on five healthcare stocks that attracted hedge funds during the second quarter, seeing notable increases in fund ownership during the period. Read on to find out which five healthcare stocks had investors piling into them.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 118% since then and outperformed the S&P 500 Index by around 60.4 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
5. Edwards Lifesciences Corp (NYSE:EW)
Investors with Long Positions (as of June 30): 46
Aggregate Value of Investors’ Holdings (as of June 30): $2.16 Billion
Let’s first look at Edwards Lifesciences Corp (NYSE:EW), in which 38 hedge funds from our database held long positions with an aggregate investment value of $1.72 billion at the end of the first quarter, showing an increase in ownership of eight funds during the second quarter. The Irvine, California-based medical equipment company has been identified as a good stock with long-term growth potential of 15.4%. Edwards Lifesciences Corp (NYSE:EW) posted earnings per share growth of 11.8% last year and is expected to post growth of 24.50% this year. In its most recent financial results for the second quarter, the company posted earnings per share of $1.13, which beat analysts’ estimates by $0.09 and represented an increase of $0.36 year-over-year. The second quarter remained flat in terms of stock price performance, although the stock has posted a 5.14% rise in share price year-to-date. During the second quarter, the Cliff Asness-run AQR Capital Management raised its stake in the stock by 25% to close the quarter as the biggest shareholder out of the funds we track. It held a long position of 2.40 million shares valued at $342.19 million.
4. Universal Health Services, Inc. (NYSE:UHS)
Investors with Long Positions (as of June 30): 50
Aggregate Value of Investors’ Holdings (as of June 30): $1.52 Billion
From Insider Monkey’s analysis, it became apparent that the King of Prussia, Pennsylvania-based Universal Health Services, Inc. (NYSE:UHS) also attracted a lot of new smart money to it, with the number of hedge funds bullish on the stock having risen from 44 at the beginning of the second quarter. The same trend was seen with these funds’ aggregate investment value, which rose by 64.38% during the period. The Fortune 500 Company recently announced its acquisition of Alpha Hospitals Holdings Limited, a move that adds four hospitals and 305 beds to its fold. Universal Health Services, Inc. (NYSE:UHS) is one of the largest hospital companies in the U.S. and delivers its services through different subsidiaries across different countries. Out of the more than 700 hedge funds tracked by Insider Monkey, Viking Global, led by Andreas Halvorsen, initiated the biggest position in the stock, putting it on top of all other funds. At the close of the second quarter, the fund held 1.22 million shares valued at $173.47 million. Another notable shareholder was billionaire Israel Englander‘s Millennium Management, which held 1.10 million shares valued at $156.18 million.