Hedge Funds Aren’t Crazy About Universal Health Services, Inc. (UHS) Anymore

Universal Health Services, Inc. (NYSE:UHS) investors: pay attention.

If you were to ask many of your peers, hedge funds are viewed as overrated, outdated financial tools of an era lost to time. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey focuses on the leaders of this club, about 525 funds. It is assumed that this group controls the majority of the smart money’s total assets, and by paying attention to their highest quality investments, we’ve spotted a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as crucial, bullish insider trading sentiment is a second way to look at the marketplace. Just as you’d expect, there are lots of incentives for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

What’s more, it’s important to study the newest info about Universal Health Services, Inc. (NYSE:UHS).

Hedge fund activity in Universal Health Services, Inc. (NYSE:UHS)

In preparation for the third quarter, a total of 38 of the hedge funds we track were long in this stock, a change of -3% from the first quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially.

When using filings from the hedgies we track, Viking Global, managed by Andreas Halvorsen, holds the most valuable position in Universal Health Services, Inc. (NYSE:UHS). Viking Global has a $253.1 million position in the stock, comprising 1.4% of its 13F portfolio. On Viking Global’s heels is Jacob Doft of Highline Capital Management, with a $68.8 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include John Lykouretzos’s Hoplite Capital Management, Jacob Gottlieb’s Visium Asset Management and Gregg J. Powers’s Private Capital Management.

As Universal Health Services, Inc. (NYSE:UHS) has experienced dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there is a sect of fund managers who were dropping their positions entirely in Q1. Intriguingly, Matt McLennan’s First Eagle Investment Management cut the biggest position of the “upper crust” of funds we track, comprising close to $40.3 million in stock, and Jeremy Green of Redmile Group was right behind this move, as the fund dropped about $24.8 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds in Q1.

How are insiders trading Universal Health Services, Inc. (NYSE:UHS)?

Bullish insider trading is best served when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time frame, Universal Health Services, Inc. (NYSE:UHS) has seen zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Universal Health Services, Inc. (NYSE:UHS). These stocks are HCA Holdings Inc (NYSE:HCA), LifePoint Hospitals, Inc. (NASDAQ:LPNT), Health Management Associates Inc (NYSE:HMA), Community Health Systems (NYSE:CYH), and Tenet Healthcare Corp (NYSE:THC). This group of stocks are the members of the hospitals industry and their market caps resemble UHS’s market cap.