This Metric Says You Are Smart to Buy Community Health Systems (CYH)
Are you smart to buy Community Health Systems (NYSE:CYH)?
Now, according to many of your peers, hedge funds are seen as delayed, old investment tools of a period lost to current times. Although there are over 8,000 hedge funds in operation today, Insider Monkey looks at the crème de la crème of this group, close to 525 funds. Analysts calculate that this group has its hands on most of all hedge funds' total capital, and by keeping an eye on their highest performing equity investments, we've figured out a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as useful, positive insider trading sentiment is a second way to analyze the marketplace. As the old adage goes: there are lots of reasons for a bullish insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if "monkeys" understand where to look (learn more here).
Furthermore, it's important to study the recent info surrounding Community Health Systems (NYSE:CYH).
What does the smart money think about Community Health Systems (NYSE:CYH)?
At Q2's end, a total of 41 of the hedge funds we track were long in this stock, a change of 11% from the first quarter. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly.
When using filings from the hedgies we track, Larry Robbins's Glenview Capital had the biggest position in Community Health Systems (NYSE:CYH), worth close to $441.4 million, comprising 4% of its total 13F portfolio. On Glenview Capital's heels is Lee Ainslie of Maverick Capital, with a $116.7 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Dinakar Singh's TPG-AXON Management LP, Andreas Halvorsen's Viking Global and Cliff Asness's AQR Capital Management.
As aggregate interest spiked, certain money managers were leading the bulls' herd. Glenview Capital, managed by Larry Robbins, established the biggest position in Community Health Systems (NYSE:CYH). Glenview Capital had 441.4 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also initiated a $116.7 million position during the quarter. The other funds with brand new CYH positions are Dinakar Singh's TPG-AXON Management LP, Andreas Halvorsen's Viking Global, and Cliff Asness's AQR Capital Management.
How are insiders trading Community Health Systems (NYSE:CYH)?
Legal insider trading, particularly when it's bullish, is best served when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, Community Health Systems (NYSE:CYH) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Community Health Systems (NYSE:CYH). These stocks are Select Medical Holdings Corporation (NYSE:SEM), LifePoint Hospitals, Inc. (NASDAQ:LPNT), Universal Health Services, Inc. (NYSE:UHS), Health Management Associates Inc (NYSE:HMA), and Tenet Healthcare Corp (NYSE:THC). This group of stocks are in the hospitals industry and their market caps are similar to CYH's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Select Medical Holdings Corporation (NYSE:SEM)
LifePoint Hospitals, Inc. (NASDAQ:LPNT)
Universal Health Services, Inc. (NYSE:UHS)
Health Management Associates Inc (NYSE:HMA)
Tenet Healthcare Corp (NYSE:THC)
Using the returns shown by Insider Monkey's analyses, average investors must always watch hedge fund and insider trading sentiment, and Community Health Systems (NYSE:CYH) shareholders fit into this picture quite nicely.