While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, 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 Aetna Inc. (NYSE:AET).
Is Aetna Inc. (NYSE:AET) a good investment right now? The smart money is selling. The number of bullish hedge fund positions shrunk by 10 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as ASML Holding N.V. (ADR) (NASDAQ:ASML), Paypal Holdings Inc (NASDAQ:PYPL), and Charles Schwab Corp (NYSE:SCHW) to gather more data points.
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At the moment there are many gauges market participants employ to grade stocks. A pair of the most innovative gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outpace the S&P 500 by a solid amount (see the details here).
Keeping this in mind, we’re going to take a look at the new action encompassing Aetna Inc. (NYSE:AET).
What have hedge funds been doing with Aetna Inc. (NYSE:AET)?
At Q3’s end, a total of 70 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakeKeeping this in mind, we’re going to take a look at the new action encompassing Aetna Inc. (NYSE:AET).s considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Glenview Capital, managed by Larry Robbins, holds the number one position in Aetna Inc. (NYSE:AET). Glenview Capital has a $608.7 million position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $419.8 million position; 0.8% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass Daniel S. Och’s OZ Management, Andreas Halvorsen’s Viking Global and Keith Meister’s Corvex Capital.
Since Aetna Inc. (NYSE:AET) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their entire stakes in the third quarter. Interestingly, Matthew Halbower’s Pentwater Capital Management sold off the largest stake of the 700 funds watched by Insider Monkey, totaling close to $214.1 million in stock. Leon Cooperman’s fund, Omega Advisors, also said goodbye to its stock, about $49.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 10 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Aetna Inc. (NYSE:AET) but similarly valued. These stocks are ASML Holding N.V. (ADR) (NASDAQ:ASML), Paypal Holdings Inc (NASDAQ:PYPL), Charles Schwab Corp (NYSE:SCHW), and Liberty Global Inc. (NASDAQ:LBTYA). This group of stocks’ market valuations resemble AET’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASML | 9 | 138344 | -4 |
| PYPL | 87 | 4942535 | 87 |
| SCHW | 48 | 3101940 | 2 |
| LBTYA | 64 | 2185240 | -6 |
As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $2,592 million. That figure was $4,588 million in AET’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand ASML Holding N.V. (ADR) (NASDAQ:ASML) is the least popular one with only 9 bullish hedge fund positions. Aetna Inc. (NYSE:AET) 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. In this regard, PYPL might be a better candidate to consider a long position.
