Is UHS A Good Stock To Buy According To Hedge Funds?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Universal Health Services, Inc. (NYSE:UHS).

Is UHS a good stock to buy? Universal Health Services, Inc. (NYSE:UHS) has seen a decrease in hedge fund sentiment lately. Universal Health Services, Inc. (NYSE:UHS) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 44. Our calculations also showed that UHS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are numerous tools investors put to use to appraise their holdings. Some of the most innovative tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat the market by a superb amount (see the details here).

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to go over the latest hedge fund action encompassing Universal Health Services, Inc. (NYSE:UHS).

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

At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in UHS over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Camber Capital Management held the most valuable stake in Universal Health Services, Inc. (NYSE:UHS), which was worth $123.1 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $67.8 million worth of shares. Glenview Capital, Solel Partners, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Universal Health Services, Inc. (NYSE:UHS), around 10.99% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 6.49 percent of its 13F equity portfolio to UHS.

Seeing as Universal Health Services, Inc. (NYSE:UHS) has experienced falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Michael Rockefeller and KarláKroeker’s Woodline Partners sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at close to $23.5 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund dumped about $3.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.

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 IPG Photonics Corporation (NASDAQ:IPGP), WestRock Company (NYSE:WRK), Caesars Entertainment Inc. (NASDAQ:CZR), The Toro Company (NYSE:TTC), American Homes 4 Rent (NYSE:AMH), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), and Watsco Inc (NYSE:WSO). This group of stocks’ market valuations are closest to UHS’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $740 million. That figure was $381 million in UHS’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand IPG Photonics Corporation (NASDAQ:IPGP) is the least popular one with only 24 bullish hedge fund positions. Universal Health Services, Inc. (NYSE:UHS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UHS is 34.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on UHS as the stock returned 28.3% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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