Express Scripts Holding Company (NASDAQ:ESRX) is the obvious Babe Ruth of the pharmacy benefit management space, and a steady year-to-date return of nearly 20% indicates that investors are using it to prepare for the coming changes in healthcare. With that being said, do hedge funds like the stock?
If you were to ask many traders, hedge funds are viewed as overrated, old financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading today, this site focuses on the masters of this club, close to 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total assets, and by tracking their highest quality picks, we’ve uncovered a few investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, positive insider trading activity is another way to analyze the stock market universe. As the old adage goes: there are lots of reasons for an executive to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).
Now that that’s out of the way, it’s important to study the recent info for Express Scripts Holding Company (NASDAQ:ESRX).
How have hedgies been trading Express Scripts Holding Company (NASDAQ:ESRX)?
Heading into Q3, a total of 72 of the hedge funds we track held long positions in this stock, a change of 6% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially.
Consequently, particular hedge funds were leading the bulls’ herd. Brave Warrior Capital, managed by Glenn Greenberg, assembled the most valuable position in Express Scripts Holding Company (NASDAQ:ESRX). Brave Warrior Capital had 259 million invested in the company at the end of the quarter. Jeffrey Tannenbaum’s Fir Tree also initiated a $240.8 million position during the quarter. The other funds with new positions in the stock are Michael Lowenstein’s Kensico Capital, John Shapiro’s Chieftain Capital, and Bob Peck and Andy Raab’s FPR Partners.
What have insiders been doing with Express Scripts Holding Company (NASDAQ:ESRX)?
Legal insider trading, particularly when it’s bullish, is at its handiest when the company in question has seen transactions within the past half-year. Over the last six-month time frame, Express Scripts Holding Company (NASDAQ:ESRX) has seen 1 unique insiders buying, and 8 insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Express Scripts Holding Company (NASDAQ:ESRX). These stocks are Humana Inc (NYSE:HUM), Aetna Inc. (NYSE:AET), CIGNA Corporation (NYSE:CI), WellPoint, Inc. (NYSE:WLP), and UnitedHealth Group Inc. (NYSE:UNH). This group of stocks are the members of the health care plans industry and their market caps are closest to ESRX’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Humana Inc (NYSE:HUM) | 33 | 0 | 9 |
| Aetna Inc. (NYSE:AET) | 55 | 0 | 4 |
| CIGNA Corporation (NYSE:CI) | 44 | 1 | 8 |
| WellPoint, Inc. (NYSE:WLP) | 50 | 0 | 11 |
| UnitedHealth Group Inc. (NYSE:UNH) | 57 | 0 | 8 |
Using the results explained by our analyses, average investors should always watch hedge fund and insider trading activity, and Express Scripts Holding Company (NASDAQ:ESRX) shareholders fit into this picture quite nicely.
