While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Universal Health Services, Inc. (NYSE:UHS).
Universal Health Services, Inc. (NYSE:UHS) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. UHS has experienced a decrease in enthusiasm from smart money of late. There were 43 hedge funds in our database with UHS holdings at the end of March. Our calculations also showed that UHS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
According to most stock holders, hedge funds are seen as unimportant, outdated investment vehicles of years past. While there are over 8000 funds trading at the moment, Our researchers hone in on the elite of this club, around 850 funds. These hedge fund managers handle the lion’s share of the hedge fund industry’s total capital, and by observing their matchless investments, Insider Monkey has come up with various investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Noam Gottesman of GLG Partners
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Do Hedge Funds Think UHS Is A Good Stock To Buy Now?
At second quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards UHS over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Glenview Capital was the largest shareholder of Universal Health Services, Inc. (NYSE:UHS), with a stake worth $147.8 million reported as of the end of June. Trailing Glenview Capital was Camber Capital Management, which amassed a stake valued at $113.5 million. Arrowstreet Capital, Partner Fund Management, and Solel Partners 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 12% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, earmarking 3.82 percent of its 13F equity portfolio to UHS.
Due to the fact that Universal Health Services, Inc. (NYSE:UHS) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there were a few fund managers that slashed their entire stakes heading into Q3. It’s worth mentioning that Renaissance Technologies said goodbye to the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $12.1 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $8.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let’s go over 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 Sociedad Química y Minera de Chile S.A. (NYSE:SQM), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Annaly Capital Management, Inc. (NYSE:NLY), Texas Pacific Land Corporation (NYSE:TPL), Cemex SAB de CV (NYSE:CX), Cna Financial Corporation (NYSE:CNA), and Sibanye Stillwater Limited (NYSE:SBSW). This group of stocks’ market caps are similar to UHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SQM | 19 | 156249 | 3 |
| CHRW | 31 | 299194 | 8 |
| NLY | 19 | 98211 | 4 |
| TPL | 21 | 2592325 | 4 |
| CX | 23 | 601778 | -1 |
| CNA | 13 | 65189 | -6 |
| SBSW | 15 | 257887 | -1 |
| Average | 20.1 | 581548 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $582 million. That figure was $724 million in UHS’s case. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Universal Health Services, Inc. (NYSE:UHS) is more popular among hedge funds. Our overall hedge fund sentiment score for UHS is 81. 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 gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately UHS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UHS were disappointed as the stock returned -11% since the end of the second quarter (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Universal Health Services Inc (NYSE:UHS)
Follow Universal Health Services Inc (NYSE:UHS)
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Disclosure: None. This article was originally published at Insider Monkey.
