Is Humana Inc (HUM) A Good Stock To Buy Right Now?

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As one would reasonably expect, key hedge funds were breaking ground themselves. Third Point, managed by Dan Loeb, assembled the most outsized position in Humana Inc (NYSE:HUM). Third Point had $247.6 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also initiated a $176.9 million position during the quarter. The following funds were also among the new HUM investors: Zach Schreiber’s Point State Capital, Roberto Mignone’s Bridger Management, and James Dinan’s York Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Humana Inc (NYSE:HUM) but similarly valued. We will take a look at Imperial Oil Limited (USA) (NYSEAMEX:IMO), Dollar General Corp. (NYSE:DG), Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS), and Vale SA (ADR) (NYSE:VALE). This group of stocks’ market valuations resemble HUM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IMO 6 76445 -3
DG 53 1173695 0
FMS 6 7036 -1
VALE 27 287513 3

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $386 million, significantly lower than the $5.95 billion in Humana’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table with 53 funds reporting long positions as of the end of September. On the other hand Imperial Oil Limited (USA) (NYSEAMEX:IMO) is the least popular one with only six bullish hedge fund positions. Compared to these stocks Humana Inc (NYSE:HUM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and new hedge funds are flocking into the stock, it may be a good idea to follow hedge funds into this merger arbitrage play.

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