Universal Health Services, Inc. (UHS): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Universal Health Services, Inc. (NYSE:UHS) has experienced an increase in hedge fund interest lately.

In the eyes of most market participants, hedge funds are perceived as unimportant, outdated investment tools of yesteryear. While there are over 8000 funds trading at the moment, we look at the aristocrats of this club, around 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by tracking their top investments, we have discovered a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as integral, optimistic insider trading activity is a second way to break down the marketplace. Obviously, there are a number of incentives for an executive to downsize shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the useful potential of this method if you know what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the key action regarding Universal Health Services, Inc. (NYSE:UHS).

How are hedge funds trading Universal Health Services, Inc. (NYSE:UHS)?

In preparation for this quarter, a total of 39 of the hedge funds we track held long positions in this stock, a change of 18% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Viking Global, managed by Andreas Halvorsen, holds the largest position in Universal Health Services, Inc. (NYSE:UHS). Viking Global has a $167.7 million position in the stock, comprising 1% of its 13F portfolio. On Viking Global’s heels is Jacob Gottlieb of Visium Asset Management, with a $77.6 million position; 2% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Ken Griffin’s Citadel Investment Group, Jacob Doft’s Highline Capital Management and Stephen DuBois’s Camber Capital Management.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Antipodean Advisors, managed by Eric Chen, assembled the most outsized position in Universal Health Services, Inc. (NYSE:UHS). Antipodean Advisors had 30.5 million invested in the company at the end of the quarter. John Lykouretzos’s Hoplite Capital Management also initiated a $27.8 million position during the quarter. The following funds were also among the new UHS investors: Don Morgan’s Brigade Capital, SAC Subsidiary’s CR Intrinsic Investors, and John Overdeck and David Siegel’s Two Sigma Advisors.

How have insiders been trading Universal Health Services, Inc. (NYSE:UHS)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Universal Health Services, Inc. (NYSE:UHS) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Universal Health Services, Inc. (NYSE:UHS). These stocks are HCA Holdings Inc (NYSE:HCA), LifePoint Hospitals, Inc. (NASDAQ:LPNT), Health Management Associates Inc (NYSE:HMA), Community Health Systems (NYSE:CYH), and Tenet Healthcare Corp (NYSE:THC). This group of stocks are in the hospitals industry and their market caps are similar to UHS’s market cap.

With the results exhibited by the aforementioned tactics, retail investors must always watch hedge fund and insider trading activity, and Universal Health Services, Inc. (NYSE:UHS) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds