Ten Most Popular Healthcare Stocks Among Hedge Funds
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By compiling 13F filings from hedge funds and other major investors in our database, we are able to analyze which stocks are in the highest favor with these class of market participants. By adding more information we are not only able to produce a list of the most popular stocks among hedge funds but also to rank stocks in different categories, such as by sector. We have gone through our data and have prepared a list of the most popular healthcare-sector stocks among hedge funds, ranked by the number of funds in our database reporting a position on their 13F. Read on for the full list or see the top ten healthcare stocks from the first quarter.
Pfizer (NYSE: PFE). Pfizer topped our list last quarter and while a couple of hedge funds left the stock- with 75 reporting positions, down from 77 in the first quarter- it remained at the top of the list as well as being the only healthcare stock to make the overall top ten. Tiger Cub Rob Citrone’s Discovery Capital Management increased its stake in Pfizer by 48% during the quarter and according to the 13F it is now one of the fund’s top five holdings (see more of Discovery's favorite stocks).
Johnson & Johnson (NYSE: JNJ). Several hedge funds initiated positions in Johnson & Johnson during the second quarter, bringing it from 61 owners to 72. Warren Buffett’s Berkshire Hathaway sold about two-thirds of its shares but still finished June with over 10 million shares of the company. Johnson & Johnson trades at 21 times trailing earnings and pays a dividend yield of 3.6%.
Express Scripts (ESRX). The pharmacy benefit management company had a bit of a spat this year with Walgreens, and has meanwhile been integrating Medco Health Solutions’ operations. 62 hedge funds owned the stock at the end of June, unchanged from the previous quarter. Billionaire Stephen Mandel’s Lone Pine Capital was the largest hedge fund holder in our database, with 7.2 million shares.
UnitedHealth (NYSE: UNH). We covered UnitedHealth Group last month, before 13F filings were released. Now we can see that 55 funds had a position in the stock at the end of the second quarter, up from 47 at the end of March. UnitedHealth and other insurers are trading at low multiples as investors worry about federal interference with health insurance markets; UnitedHealth’s trailing P/E is 11 and its forward P/E is 10.
Sanofi SA (NYSE: SNY). Sanofi claimed the #2 spot on this list a quarter ago, but the number of hedge funds reporting positions fell from 62 to 55. Billionaire Ken Fisher’s Fisher Asset Management owned over 14 million shares at the end of June. Sanofi, a $108 billion market cap drug manufacturer, trades at a trailing P/E of 13 and pays a 4.1% dividend yield. The stock is up about 18% over the last year, roughly even with the market.
WellPoint (WLP). 53 hedge funds reported positions in WellPoint, up from 52. First Eagle Investment Management increased its stake in the health insurer to 6.8 million shares. Like UnitedHealth, WellPoint trades at value levels: a trailing P/E of 8. Year to date the stock is down 13% as the company missed earnings last quarter and the fourth quarter of last year.
Merck (NYSE: MRK). A few hedge funds initiated positions in Merck during the quarter, and the drug manufacturer climbed from 45 hedge fund holders to 49. Merck trades at 20 times trailing earnings and pays a high dividend yield of nearly 4%. Point State Capital, run by several former portfolio managers at Duquesne Capital, was one owner of the stock.
Abbott Laboratories (ABT). 45 hedge funds owned Abbott Laboratories at the end of June, down from 48 three months earlier. Diamond Hill Capital owned 3.7 million shares of the stock, making it one of the fund’s top positions.
Aetna (AET). 34 hedge funds reported positions of Aetna at the end of the first quarter, and over the second quarter that number grew to 44, vaulting the insurer onto the top ten list. Billionaire David Einhorn’s Greenlight Capital initiated a position in the stock.
HCA Holdings (HCA). About a month ago, we looked at HCA Holdings. The number of hedge funds owning the stock stayed constant between the beginning and the end of the second quarter, at 43. The hospital owner and operator trades at 5 times trailing earnings.
This article is written by Matt Doiron and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson and UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.