4 Healthcare Stocks With Hedge Fund and Insider Backing

 

Looking to add healthcare stocks to your portfolio? This list could be a great place to start your search.

We screened the healthcare sector for companies with market caps above $300M and bullish sentiment from both hedge funds and company insiders – an arguably powerful combination.

Specifically, our screen then takes into account companies witnessing institutional investors, ie. hedge funds, buying shares representing a minimum of 5% of the share float in the current quarter. For example, institutional purchases on Aegerion Pharmaceuticals (AEGR) total over 14% of all the tradable shares of the company, which is quite bullish.

Another positive indicator for a company’s health is insider buying. This represents the shares bought by employees of the company, those who really know the firm best. If the people who work there are buying up the stock, it usually means they consider it undervalued and expect the price to go up, otherwise, why would they be buying it with their own money? The screen takes into account purchases totaling more than 1% of the share float.

Business Section: Investing Ideas

Investors often feel more confident when they see institutional buyers investing in a company, especially given that they have access to more market research than the average trader. This, along with backing from those who know the ins and outs of the company best, could represent even more growth to come.

All four companies are reporting earnings for the most recent quarter within the next two weeks.

Check out Kapitall’s Compar-O-Matic below to see the 1-year returns for the four healthcare companies listed beneath it. All four have seen significant gains over the last year. Do you think they can keep it up? 

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1. Aegerion Pharmaceuticals, Inc. (AEGR, Earnings, Analysts, Financials): Engages in the development and commercialization of novel therapeutics to treat severe lipid disorders. Market cap at $1.08B, most recent closing price at $37.66.

Net institutional purchases in the current quarter at 3.4M shares, which represents about 14.06% of the company's float of 24.18M shares.

Over the last six months, insiders were net buyers of 624,767 shares, which represents about 2.58% of the company's 24.18M share float.

Lazard Capital and Deutsche Bank have recently increased their target prices for Aegerion to $53 and $52, respectively. AEGR reports earnings on 4/30/13.

 

2. DaVita, Inc. (DVA, Earnings, Analysts, Financials): Provides kidney dialysis services in the United States. Market cap at $12.68B, most recent closing price at $120.19.

Net institutional purchases in the current quarter at 6.0M shares, which represents about 5.71% of the company's float of 105.12M shares.

Over the last six months, insiders were net buyers of 3,692,072 shares, which represents about 3.51% of the company's 105.12M share float.

Earlier this month Deutche Bank increased the target price on DaVita to $136. DVA reports earnings 5/7/13.

 

3. Health Management Associates Inc. (HMA, Earnings, Analysts, Financials): Engages in the operation of general acute care hospitals and other health care facilities in non-urban communities in the United States. Market cap at $2.9B, most recent closing price at $11.20.

Net institutional purchases in the current quarter at 17.2M shares, which represents about 8.15% of the company's float of 211.06M shares.

Over the last six months, insiders were net buyers of 7,921,910 shares, which represents about 3.75% of the company's 211.06M share float.

HMA just received exclusive rights to negotiate the operation of Munroe Regional Medical Center in Florida, the stock traded up 3.1% following the news. HMA reports earnings 5/2/13.

 

4. Lexicon Pharmaceuticals, Inc. (LXRX, Earnings, Analysts, Financials): Focuses on the discovery and development of drug candidates for the treatment of various human diseases. Market cap at $1.17B, most recent closing price at $2.28.

Net institutional purchases in the current quarter at 14.0M shares, which represents about 6.16% of the company's float of 227.31M shares.

Over the last six months, insiders were net buyers of 3,000,000 shares, which represents about 1.32% of the company's 227.31M share float.

Lexicon shares dropped on Monday over concerns of a diabetes partnership between Merck (MRK and Pfizer (PFE), which could stifle their own ability to form a partnership to help support the cost of their drug development. LXRX reports earnings 5/2/13.

 

 -Ryan Horch, Kapitall

 

 

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Analyze These Ideas: Getting Started

Read descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

Aegerion Pharmaceuticals, Inc. (AEGR, Chart, Download SEC Filings) DaVita, Inc. (DVA, Chart, Download SEC Filings) Health Management Associates Inc. (HMA, Chart, Download SEC Filings) Lexicon Pharmaceuticals, Inc. (LXRX, Chart, Download SEC Filings)

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ABOUT KAPITALL WIREKapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

 

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