Here is What Hedge Funds Think About Community Health Systems (CYH)

Community Health Systems (NYSE:CYH) was in 37 hedge funds’ portfolio at the end of March. CYH investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 19 hedge funds in our database with CYH positions at the end of the previous quarter.

According to most investors, hedge funds are seen as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at present, we hone in on the leaders of this group, around 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total asset base, and by paying attention to their top stock picks, we have found a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, bullish insider trading sentiment is a second way to break down the investments you’re interested in. Obviously, there are plenty of incentives for an insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).

Now, it’s important to take a look at the recent action regarding Community Health Systems (NYSE:CYH).

How have hedgies been trading Community Health Systems (NYSE:CYH)?

At the end of the first quarter, a total of 37 of the hedge funds we track were long in this stock, a change of 95% from the first quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Glenview Capital, managed by Larry Robbins, holds the largest position in Community Health Systems (NYSE:CYH). Glenview Capital has a $427.2 million position in the stock, comprising 4.5% of its 13F portfolio. Sitting at the No. 2 spot is Maverick Capital, managed by Lee Ainslie, which held a $116.4 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Andreas Halvorsen’s Viking Global, Cliff Asness’s AQR Capital Management and Dinakar Singh’s TPG-AXON Management LP.

As industrywide interest jumped, key money managers have jumped into Community Health Systems (NYSE:CYH) headfirst. Maverick Capital, managed by Lee Ainslie, assembled the biggest position in Community Health Systems (NYSE:CYH). Maverick Capital had 116.4 million invested in the company at the end of the quarter. Andreas Halvorsen’s Viking Global also initiated a $79.4 million position during the quarter. The other funds with new positions in the stock are James E. Flynn’s Deerfield Management, Sean Cullinan’s Point State Capital, and Keith Meister’s Corvex Capital.

What have insiders been doing with Community Health Systems (NYSE:CYH)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, Community Health Systems (NYSE:CYH) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Community Health Systems (NYSE:CYH). These stocks are Select Medical Holdings Corporation (NYSE:SEM), LifePoint Hospitals, Inc. (NASDAQ:LPNT), Universal Health Services, Inc. (NYSE:UHS), Health Management Associates Inc (NYSE:HMA), and Tenet Healthcare Corp (NYSE:THC). All of these stocks are in the hospitals industry and their market caps resemble CYH’s market cap.

With the results demonstrated by the aforementioned time-tested strategies, everyday investors should always monitor hedge fund and insider trading activity, and Community Health Systems (NYSE:CYH) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds