Hedge Funds Are Crazy About Coventry Health Care, Inc. (CVH)

Coventry Health Care, Inc. (NYSE:CVH) has seen an increase in support from the world’s most elite money managers lately.

In the financial world, there are many indicators investors can use to monitor stocks. A couple of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the S&P 500 by a superb margin (see just how much).

Equally as important, optimistic insider trading sentiment is another way to break down the financial markets. Obviously, there are plenty of incentives for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this method if investors understand where to look (learn more here).

With these “truths” under our belt, let’s take a look at the recent action encompassing Coventry Health Care, Inc. (NYSE:CVH).

Hedge fund activity in Coventry Health Care, Inc. (NYSE:CVH)

Heading into Q2, a total of 32 of the hedge funds we track were bullish in this stock, a change of 7% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Alpine Associates, managed by Robert Emil Zoellner, holds the biggest position in Coventry Health Care, Inc. (NYSE:CVH). Alpine Associates has a $219.3 million position in the stock, comprising 8.5% of its 13F portfolio. Coming in second is Matthew Halbower of Pentwater Capital Management, with a $169.3 million position; 7.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Cliff Asness’s AQR Capital Management, Thomas Lenox Kempner’s Davidson Kempner and Jim Simons’s Renaissance Technologies.

Now, key money managers have jumped into Coventry Health Care, Inc. (NYSE:CVH) headfirst. Davidson Kempner, managed by Thomas Lenox Kempner, initiated the most outsized position in Coventry Health Care, Inc. (NYSE:CVH). Davidson Kempner had 115.9 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $25.8 million investment in the stock during the quarter. The following funds were also among the new CVH investors: David Costen Haley’s HBK Investments, D. E. Shaw’s D E Shaw, and John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co.

How have insiders been trading Coventry Health Care, Inc. (NYSE:CVH)?

Insider buying is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time frame, Coventry Health Care, Inc. (NYSE:CVH) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Coventry Health Care, Inc. (NYSE:CVH). These stocks are Health Net, Inc. (NYSE:HNT), Centene Corp (NYSE:CNC), Aetna Inc. (NYSE:AET), WellCare Health Plans, Inc. (NYSE:WCG), and Humana Inc (NYSE:HUM). This group of stocks belong to the health care plans industry and their market caps resemble CVH’s market cap.