Aetna Inc. (AET): Is It Good Insurance for Hedge Funds?

Aetna Inc. (NYSE:AET) is a health insurer whose run so far in the year has been more than satisfactory. The company enjoys strong cash flow, solid financial position, steady growth and reasonable debt levels in most measure. As the company sees growth, the management is sharing the good news with investors in the form of a dividend increase. Aetna Inc. will now pay its shareholders a quarterly dividend of 22.5 cents per share, up from 20 cents a share in the previous allocation. While announcing the new dividend rates, Aetna Inc. (NYSE:AET) sought to assure investors of its promising future by pointing to its stable capital position and confidence in strategy than that so far brought it to profitability.

Aetna Inc. (NYSE:AET)

Hedge fund activity on Aetna Inc. (NYSE:AET) stock

Taking a look at hedge-fund activity in Aetna Inc. (NYSE:AET), 55 hedge funds tracked by Insider Monkey were holding long position on the stock at the close of the third quarter, which is unchanged from the prior quarter (and is considered a bearish signal). Among the hedgies with long positions on the stock is Paulson & Co, managed by John Paulson. Paulson & Co’s investment was worth $512 million, or 3.3 percent of its portfolio. The second place is held by David Einhorn’s Greenlight Capital, which has a $355.3-million investment in the stock, comprising 6.3 percent of its portfolio allocation. Optimism on the stock can also be seen in peer hedgies such as Fir Tree managed by Jeffrey Tannenbaum,  Brian Ashford-Russell and Tim Woolley’s Polar Capital and Orbis Investment Management under William B. Gray.

Some hedge funds have also weakened or even shut down their positions in Aetna Inc. (NYSE:AET) during the third quarter. JHL Capital Group managed by James H. Litinsky cut its stockholding in the health insurer by about $47.7 million in the quarter. The intriguing one was Barry Rosenstein’s JANA Partners which shutdown its position in the stock, ending its hold of about $260.5 million in AET.

Insiders trading of Aetna Inc. (NYSE:AET)

Over the past six months, Aetna Inc. (NYSE:AET) hasn’t experienced unique insiders buying, however, four insider sales have been noted (see the details of insider trades here).

At this juncture, it’s important to cross over and take a look at similar stocks as Aetna Inc. (NYSE:AET) in terms of hedge-fund activity and insider trading. These stocks include Express Scripts Holding Company (NASDAQ:ESRX), Humana Inc (NYSE:HUM), Coventry Health Care, Inc. (NYSE:CVH), CIGNA Corporation (NYSE:CI) and WellPoint, Inc. (NYSE:WLP). These stocks are similar to AET in that they are in the health care plans industry and their market caps are also similar to that of Aetna Inc. (NYSE:AET).

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Express Scripts Holding Company (NASDAQ:ESRX) 69 0 8
Humana Inc (NYSE:HUM) 32 1 10
WellPoint, Inc. (NYSE:WLP) 51 0 8
CIGNA Corporation (NYSE:CI) 44 0 9

Looking at the table above, Aetna Inc. (NYSE:AET) stands popular among hedge funds at 55, only second to Express Scripts Holding Company (NASDAQ:ESRX) which has 69 hedge funds involved in its stock.


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