Prominent hedge fund managers appeared to make big first-quarter bets in UnitedHealth Group Inc, Anthem Inc and other health insurers whose shares tumbled in January after Jeff Bezos, Warren Buffett and Jamie Dimon in January announced a joint venture to slash U.S. healthcare costs.
Jana Partners added a new position in Anthem, while Omega Advisors and Tiger Management both added new positions in UnitedHealth Group, according to regulatory filings released Tuesday. Shares of Anthem are 10.5 per cent below the high for the year reached in January, while shares of UnitedHealth are 3.1 per cent below January highs.
Shares of healthcare companies have come under pressure this year due to the threat of increased competition. Buffett, famed for his love of junk food, has said spiraling healthcare costs are responsible for 18 per cent of U.S. gross domestic product, up from 5 per cent in 1960, and he wants to slash a few percentage points off.
The partnership between Amazon.com Inc, Berkshire Hathaway Inc, and JPMorgan Chase & Co - which collectively employ more than 1 million people - announced plans to reform healthcare for their own employees while simultaneously reducing their own companies’ coverage costs, though it has yet to make significant progress.
“I think we’ll have a CEO within a couple of months,” Buffett said at Berkshire Hathaway’s annual shareholder’s meeting earlier this month. “We want our employees to get better medical services at lower cost ... The resistance will be unbelievable, and if we fail, at least we tried.”
At the same time, shares of pharmacy benefits managers Express Scripts Holdings Co and CVS Health Corp have slid on concerns that Amazon.com Inc will enter the business. Glenview Capital Management Chief Executive Larry Robbins made a bullish case for both stocks at the Sohn Investment Conference in New York on April 23, one of the most prominent hedge fund conferences of the year.
Amazon’s entry into the business of selling medications, is “neither imminent, assured, nor likely to succeed,” he said.
Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of tracking what the managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures come 45 days after the end of each quarter and may not reflect current positions.
Along with the bets on healthcare companies, large hedge fund managers also added to so-called FANG stocks during the first quarter as the tech sector slid due to fears of increased regulatory oversight. Jana Partners added a new position in Apple Inc while selling all of its shares in Facebook Inc, while Tiger Management added to its positions in Google-parent Alphabet and Facebook.
Overall, hedge funds are up by an average of 0.4 percent for the year to date, according to Hedge Fund Research, while the broad S&P 500 is up 1.2 percent over the same time.