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Is HCA Holdings Inc (HCA) Going to Burn These Hedge Funds?

If you were to ask many market players, hedge funds are assumed to be bloated, outdated financial tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open in present day, this site aim at the bigwigs of this club, about 525 funds. It is widely held that this group controls the lion’s share of the smart money’s total capital, and by monitoring their best equity investments, we’ve identified a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

HCA Holdings Inc (NYSE:HCA)

Just as necessary, positive insider trading sentiment is another way to analyze the financial markets. Obviously, there are lots of stimuli for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).

Now that that’s out of the way, let’s analyze the latest info surrounding HCA Holdings Inc (NYSE:HCA).

Hedge fund activity in HCA Holdings Inc (NYSE:HCA)

Heading into Q3, a total of 63 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

When using filings from the hedgies we track, Larry Robbins’s Glenview Capital had the most valuable position in HCA Holdings Inc (NYSE:HCA), worth close to $354.9 million, comprising 3.2% of its total 13F portfolio. The second largest stake is held by Lee Ainslie of Maverick Capital, with a $207.2 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Other hedgies that are bullish include William B. Gray’s Orbis Investment Management, John Griffin’s Blue Ridge Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Because HCA Holdings Inc (NYSE:HCA) has witnessed bearish sentiment from the smart money’s best and brightest, we can see that there were a few hedge funds who sold off their entire stakes at the end of the second quarter. Interestingly, Kenneth Mario Garschina’s Mason Capital Management cut the biggest investment of the “upper crust” of funds we key on, totaling close to $267.7 million in stock, and Robert Pohly of Samlyn Capital was right behind this move, as the fund said goodbye to about $78.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 10 funds at the end of the second quarter.

How are insiders trading HCA Holdings Inc (NYSE:HCA)?

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time frame, HCA Holdings Inc (NYSE:HCA) has experienced zero unique insiders purchasing, and 15 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to HCA Holdings Inc (NYSE:HCA). These stocks are LifePoint Hospitals, Inc. (NASDAQ:LPNT), Health Management Associates Inc (NYSE:HMA), Community Health Systems (NYSE:CYH), Tenet Healthcare Corp (NYSE:THC), and Universal Health Services, Inc. (NYSE:UHS). This group of stocks are in the hospitals industry and their market caps resemble HCA’s market cap.

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