UnitedHealth Group Inc. (UNH): Are Hedge Funds Right About This Stock?
UnitedHealth Group Inc. (NYSE:UNH)'s Obamacare potential is mind-blowing. The stock is up over 30% year-to-date, and the gains look set to continue according to most analysts. How were the world's richest hedge funds treating the stock last quarter?
Fairly well. Let's take a closer look.
In today’s marketplace, there are many methods shareholders can use to monitor their holdings. A duo of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can beat their index-focused peers by a solid margin (see just how much).
Equally as key, bullish insider trading sentiment is another way to look at the stock market universe. As the old adage goes: there are many stimuli for an executive to drop shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the impressive potential of this strategy if "monkeys" understand what to do (learn more here).
Furthermore, we're going to discuss the recent info surrounding UnitedHealth Group Inc. (NYSE:UNH).
What have hedge funds been doing with UnitedHealth Group Inc. (NYSE:UNH)?
Heading into Q3, a total of 57 of the hedge funds we track were bullish in this stock, a change of 4% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially.
When using filings from the hedgies we track, Natixis Global Asset Management's Harris Associates had the largest position in UnitedHealth Group Inc. (NYSE:UNH), worth close to $824.5 million, comprising 1.7% of its total 13F portfolio. Coming in second is Boykin Curry of Eagle Capital Management, with a $718.4 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include William B. Gray's Orbis Investment Management, Lee Ainslie's Maverick Capital and John Shapiro's Chieftain Capital.
Now, certain bigger names have been driving this bullishness. Eagle Capital Management, managed by Boykin Curry, created the largest position in UnitedHealth Group Inc. (NYSE:UNH). Eagle Capital Management had 718.4 million invested in the company at the end of the quarter. William B. Gray's Orbis Investment Management also initiated a $289.9 million position during the quarter. The other funds with brand new UNH positions are Lee Ainslie's Maverick Capital, John Shapiro's Chieftain Capital, and Bill Miller's Legg Mason Capital Management.
How have insiders been trading UnitedHealth Group Inc. (NYSE:UNH)?
Legal insider trading, particularly when it's bullish, is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last 180-day time period, UnitedHealth Group Inc. (NYSE:UNH) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to UnitedHealth Group Inc. (NYSE:UNH). These stocks are Humana Inc (NYSE:HUM), Aetna Inc. (NYSE:AET), CIGNA Corporation (NYSE:CI), WellPoint, Inc. (NYSE:WLP), and Express Scripts Holding Company (NASDAQ:ESRX). This group of stocks are in the health care plans industry and their market caps are closest to UNH's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Humana Inc (NYSE:HUM)
Aetna Inc. (NYSE:AET)
CIGNA Corporation (NYSE:CI)
WellPoint, Inc. (NYSE:WLP)
Express Scripts Holding Company (NASDAQ:ESRX)
Using the returns explained by Insider Monkey's strategies, regular investors should always keep one eye on hedge fund and insider trading activity, and UnitedHealth Group Inc. (NYSE:UNH) shareholders fit into this picture quite nicely.