The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Humana Inc (NYSE:HUM).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the latest hedge fund action regarding Humana Inc (NYSE:HUM).
What have hedge funds been doing with Humana Inc (NYSE:HUM)?
At Q2's end, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a change of 48% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards HUM over the last 16 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Humana Inc (NYSE:HUM), with a stake worth $780 million reported as of the end of March. Trailing Renaissance Technologies was Glenview Capital, which amassed a stake valued at $466.2 million. Maverick Capital, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Point State Capital, managed by Zach Schreiber, established the largest position in Humana Inc (NYSE:HUM). Point State Capital had $180.5 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $115.7 million position during the quarter. The following funds were also among the new HUM investors: OZ Management, Ric Dillon's Diamond Hill Capital, and Jeffrey Altman's Owl Creek Asset Management.
Let's go over 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 eBay Inc (NASDAQ:EBAY), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Eaton Corporation plc (NYSE:ETN), and V.F. Corporation (NYSE:VFC). All of these stocks' market caps are similar to HUM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EBAY,47,3898481,-1 REGN,37,1330987,6 ETN,36,796336,-3 VFC,32,985424,3 Average,38,1752807,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1753 million. That figure was $4262 million in HUM's case. eBay Inc (NASDAQ:EBAY) is the most popular stock in this table. On the other hand V.F. Corporation (NYSE:VFC) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks Humana Inc (NYSE:HUM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HUM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HUM were disappointed as the stock returned -3.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (see the video below) among hedge funds as many of these stocks already outperformed the market in Q3. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.