Humana Inc (NYSE:HUM) has made any of its supporters look smart for some time now. But nothing lasts forever. One indicator suggests that profit-taking may be in store for the stock.
In the financial world, there are many metrics shareholders can use to analyze publicly traded companies. A couple of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce their index-focused peers by a significant amount (see just how much).
Just as crucial, positive insider trading sentiment is another way to analyze the stock market universe. Just as you’d expect, there are plenty of reasons for an insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).
Keeping this in mind, we’re going to examine the recent info surrounding Humana Inc (NYSE:HUM).
What does the smart money think about Humana Inc (NYSE:HUM)?
In preparation for the third quarter, a total of 33 of the hedge funds we track were long in this stock, a change of -8% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably.
Due to the fact Humana Inc (NYSE:HUM) has witnessed declining interest from the top-tier hedge fund industry, we can see that there was a specific group of funds that elected to cut their entire stakes heading into Q2. It’s worth mentioning that Robert Pohly’s Samlyn Capital said goodbye to the largest stake of the “upper crust” of funds we key on, totaling about $48.8 million in call options.. Stephen DuBois’s fund, Camber Capital Management, also said goodbye to its call options., about $41.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q2.
What have insiders been doing with Humana Inc (NYSE:HUM)?
Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past six months. Over the last 180-day time frame, Humana Inc (NYSE:HUM) has experienced zero unique insiders purchasing, and 9 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 Humana Inc (NYSE:HUM). These stocks are Express Scripts Holding Company (NASDAQ:ESRX), WellPoint, Inc. (NYSE:WLP), Coventry Health Care, Inc. (NYSE:CVH), CIGNA Corporation (NYSE:CI), and Aetna Inc. (NYSE:AET). This group of stocks are in the health care plans industry and their market caps resemble HUM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Express Scripts Holding Company (NASDAQ:ESRX) | 72 | 1 | 8 |
| WellPoint, Inc. (NYSE:WLP) | 50 | 0 | 11 |
| Coventry Health Care, Inc. (NYSE:CVH) | 0 | 4 | |
| CIGNA Corporation (NYSE:CI) | 44 | 1 | 8 |
| Aetna Inc. (NYSE:AET) | 55 | 0 | 4 |
Using the returns demonstrated by the previously mentioned analyses, regular investors must always track hedge fund and insider trading sentiment, and Humana Inc (NYSE:HUM) shareholders fit into this picture quite nicely.
