Here is What Hedge Funds Think About Humana Inc (HUM)

In this article we are going to use hedge fund sentiment as a tool and determine whether Humana Inc (NYSE:HUM) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Humana Inc (NYSE:HUM) was in 60 hedge funds’ portfolios at the end of September. The all time high for this statistic is 75. HUM investors should be aware of an increase in support from the world’s most elite money managers recently. There were 59 hedge funds in our database with HUM positions at the end of the second quarter. Our calculations also showed that HUM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a gander at the recent hedge fund action regarding Humana Inc (NYSE:HUM).

Mark Kingdon of Kingdon Capital

Do Hedge Funds Think HUM Is A Good Stock To Buy Now?

At Q3’s end, a total of 60 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HUM over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Andreas Halvorsen’s Viking Global has the biggest position in Humana Inc (NYSE:HUM), worth close to $1.1702 billion, accounting for 3.2% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $186.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include Israel Englander’s Millennium Management, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and OrbiMed Advisors. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Humana Inc (NYSE:HUM), around 8.8% of its 13F portfolio. BloombergSen is also relatively very bullish on the stock, dishing out 5.53 percent of its 13F equity portfolio to HUM.

Consequently, key hedge funds were leading the bulls’ herd. Columbus Hill Capital Management, managed by Kevin D. Eng, established the largest position in Humana Inc (NYSE:HUM). Columbus Hill Capital Management had $54.8 million invested in the company at the end of the quarter. Isaac Corre’s Governors Lane also initiated a $46.7 million position during the quarter. The other funds with brand new HUM positions are Isaac Corre’s Governors Lane, Mark Kingdon’s Kingdon Capital, and Richard Mashaal’s Rima Senvest Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Humana Inc (NYSE:HUM) but similarly valued. We will take a look at Marvell Technology, Inc. (NASDAQ:MRVL), Dollar General Corp. (NYSE:DG), Banco Santander (Brasil) SA (NYSE:BSBR), Johnson Controls International plc (NYSE:JCI), Keurig Dr Pepper Inc. (NASDAQ:KDP), Coupang, Inc. (NYSE:CPNG), and Wipro Limited (NYSE:WIT). This group of stocks’ market valuations are closest to HUM’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $2332 million. That figure was $2901 million in HUM’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Humana Inc (NYSE:HUM) is more popular among hedge funds. Our overall hedge fund sentiment score for HUM is 80. 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. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on HUM as the stock returned 7.9% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.