The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Humana Inc (NYSE:HUM)?
Humana Inc (NYSE:HUM) has seen a decrease in activity from the world’s largest hedge funds of late. Humana Inc (NYSE:HUM) was in 53 hedge funds’ portfolios at the end of March. The all time high for this statistic is 75. There were 59 hedge funds in our database with HUM positions at the end of the fourth quarter. Our calculations also showed that HUM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the fresh hedge fund action encompassing Humana Inc (NYSE:HUM).
Do Hedge Funds Think HUM Is A Good Stock To Buy Now?
At first quarter’s end, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. By comparison, 70 hedge funds held shares or bullish call options in HUM a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rajiv Jain’s GQG Partners has the most valuable position in Humana Inc (NYSE:HUM), worth close to $481.7 million, comprising 1.8% of its total 13F portfolio. The second most bullish fund is Diamond Hill Capital, with a $471.6 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position BloombergSen allocated the biggest weight to Humana Inc (NYSE:HUM), around 6.27% of its 13F portfolio. Welch Capital Partners is also relatively very bullish on the stock, dishing out 3.88 percent of its 13F equity portfolio to HUM.
Because Humana Inc (NYSE:HUM) has witnessed falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Lone Pine Capital sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $618.8 million in stock. Robert Pitts’s fund, Steadfast Capital Management, also said goodbye to its stock, about $111.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 6 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Humana Inc (NYSE:HUM). These stocks are Northrop Grumman Corporation (NYSE:NOC), Metlife Inc (NYSE:MET), Atlassian Corporation Plc (NASDAQ:TEAM), Southern Copper Corporation (NYSE:SCCO), The Blackstone Group Inc. (NYSE:BX), Moderna, Inc. (NASDAQ:MRNA), and Edwards Lifesciences Corporation (NYSE:EW). This group of stocks’ market caps match HUM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOC | 40 | 1510503 | 0 |
| MET | 32 | 1147122 | -5 |
| TEAM | 67 | 3955751 | -2 |
| SCCO | 27 | 589771 | 4 |
| BX | 49 | 1626408 | -5 |
| MRNA | 39 | 1640099 | -2 |
| EW | 36 | 1462451 | -2 |
| Average | 41.4 | 1704586 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.4 hedge funds with bullish positions and the average amount invested in these stocks was $1705 million. That figure was $2878 million in HUM’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Southern Copper Corporation (NYSE:SCCO) is the least popular one with only 27 bullish hedge fund positions. Humana Inc (NYSE:HUM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HUM is 52.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately HUM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HUM were disappointed as the stock returned 0% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
