As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Universal Health Services, Inc. (NYSE:UHS).
Is Universal Health Services, Inc. (NYSE:UHS) undervalued? The smart money is getting more bullish. The number of long hedge fund bets inched up by 1 lately. Our calculations also showed that uhs isn’t among the 30 most popular stocks among hedge funds. UHS was in 29 hedge funds’ portfolios at the end of the first quarter of 2019. There were 28 hedge funds in our database with UHS positions at the end of the previous quarter.
To the average investor there are many indicators investors can use to size up publicly traded companies. Two of the less known indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can trounce the market by a significant margin (see the details here).
We’re going to view the fresh hedge fund action encompassing Universal Health Services, Inc. (NYSE:UHS).
Hedge fund activity in Universal Health Services, Inc. (NYSE:UHS)
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UHS over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Universal Health Services, Inc. (NYSE:UHS) was held by Glenview Capital, which reported holding $275.3 million worth of stock at the end of March. It was followed by AQR Capital Management with a $105.9 million position. Other investors bullish on the company included Camber Capital Management, Polar Capital, and Arrowstreet Capital.
Consequently, some big names have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, established the biggest position in Universal Health Services, Inc. (NYSE:UHS). Renaissance Technologies had $9.6 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Universal Health Services, Inc. (NYSE:UHS) but similarly valued. We will take a look at Quest Diagnostics Incorporated (NYSE:DGX), Atmos Energy Corporation (NYSE:ATO), Broadridge Financial Solutions, Inc. (NYSE:BR), and Lincoln National Corporation (NYSE:LNC). This group of stocks’ market caps match UHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DGX | 22 | 303617 | -4 |
| ATO | 20 | 292201 | -5 |
| BR | 26 | 396752 | 4 |
| LNC | 40 | 563951 | 7 |
| Average | 27 | 389130 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $389 million. That figure was $761 million in UHS’s case. Lincoln National Corporation (NYSE:LNC) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 20 bullish hedge fund positions. Universal Health Services, Inc. (NYSE:UHS) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately UHS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UHS were disappointed as the stock returned -10.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
