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.
3. Walgreens Boots Alliance Inc (NASDAQ:WBA)
Investors with Long Positions (as of June 30): 81
Aggregate Value of Investors’ Holdings (as of June 30): $9.13 Billion
Another healthcare stock that proved to be an irresistible one to hedge funds was Walgreens Boots Alliance Inc (NASDAQ:WBA), which is one of the largest drug store chains in the U.S., with stores in all 50 states. Going into the second quarter, 69 hedge funds out of the ones tracked by Insider Monkey were long in the stock, with $7.84 billion worth of shares. Walgreens Boots Alliance Inc (NASDAQ:WBA) recently announced a deal with Providence Health & Services to expand its activities in Washington and Oregon by opening 25 new in-store clinics in those states. The focus of the partnership is to provide quality healthcare and affordable prices to patients, although the in-store clinics will remain the property of Providence Health & Services. The company has been undergoing various restructuring processes, including recently laid off 370 employees in a bid to cut down on costs. Earlier this year, the company announced a strategic plan to close down up to 200 of its underperforming drugstores across different states as well. The move was part of the broader strategy, which aims to achieve a cost savings of $1.5 billion by the end of 2017. Out of the hedge funds tracked by Insider Monkey, Viking Global, run by billionaire Andreas Halvorsen, emerged as the biggest shareholder in our database at the end of the quarter. The fund held a total of 24.63 million shares with a market value of $2.08 billion.
2. Perrigo Company plc Ordinary Shares (NYSE:PRGO)
Investors with Long Positions (as of June 30): 83
Aggregate Value of Investors’ Holdings (as of June 30): $4.84 Billion
Perrigo Company plc Ordinary Shares (NYSE:PRGO) is another healthcare stock that attracted hedge funds during the second quarter. At the beginning of the quarter, there were only 37 hedge funds that were long in the stock out of the ones tracked by Insider Monkey. Aggregate investment also rose by 305.22% during the quarter, which was quite a bullish move by the smart money. Hedge funds’ sentiment on Perrigo Company plc Ordinary Shares (NYSE:PRGO) was right, as the stock’s performance was strong, gaining 11.65%, though that has not been the case in the third quarter, with it having lost 3.58% of its share price. The international manufacturer of over-the-counter pharmaceuticals recently announced a deal to acquire Naturwohl Pharma GmbH with Yokebe, the company’s leading German dietary supplement brand, which is expected to pull in around $470 million in net sales for the current financial year. York Capital Management, led by billionaire James Dinan, and OZ Management, headed by billionaire Daniel S. Och, were among the hedge funds that initiated positions in the stock during the second quarter.
1. HCA Holdings Inc (NYSE:HCA)
Investors with Long Positions (as of June 30): 83
Aggregate Value of Investors’ Holdings (as of June 30): $5.02 Billion
In conclusion, let’s have a look at HCA Holdings Inc (NYSE:HCA) in which the number of hedge funds with long positions rose from 69 and the aggregate ownership jumped from $3.68 billion. The company, which is the largest for-profit operator of healthcare facilities, carries out numerous activities through its subsidiaries such as HCA International, Columbia Hospital Corp, HCA United Kingdom Ltd, and PatientKeeper. Just like the hedge fund sentiment, HCA Holdings Inc (NYSE:HCA) share price leaped upwards by 20.59% during the second quarter and has gained 14.88% year-to-date. In its most recent financial earnings results, the company reported earnings per share of $1.37, beating analysts’ consensus estimate by $0.02, and representing an uptick of $0.50 compared to the same quarter from the year before. The increase can be attributed to increased admissions at its facilities, following the coming-into-effect of the Affordable Care Act. At the end of the quarter, Glenview Capital, managed by billionaire Larry Robbins, was also invested in the stock, owning 5.18 million shares with a market value of $469.80 million.