By Svea Herbst-Bayliss
NEW YORK, Nov 14 (Reuters) - Healthcare stocks, including insurers, are primed for a shot in the arm from a Trump presidency and some hedge fund managers stand to reap the gains after making new bets in the sector in the third quarter.
Billionaire investor Daniel Loeb, who recently told clients that idiosyncratic opportunities have buoyed Third Point's portfolio this year, invested in insurer Humana Inc (NYSE:HUM) HUM.N during the third quarter, according to a new filing. Loeb's hedge fund bought 1.4 million shares of Humana.
Diamond Hill Capital, Samlyn Capital, P. Schoenfeld Asset Management and Clovis Capital Management also made new bets on the insurer, although they were far smaller, according to regulatory filings that show what U.S. stocks investment managers owned on Sept. 30.
Over the last six weeks, Humana has been one of the sector's best performers, boasting a 12.16 percent gain since Sept. 30. Since January, the stock has gained 11 percent, handily outperforming the S&P 500's 6 percent gain.
Some insurers including UnitedHealth Group Inc (NYSE:UNH) UNH.N and Anthem Inc ANTM.N had said they are losing money on the healthcare exchanges created by President Barack Obama's Affordable Care Act.
With Donald Trump vowing to overturn the law, UnitedHealth and Anthem have also posted strong gains since the end of the third quarter. Anthem has climbed 10.5 percent in the last six weeks with UnitedHealth gaining 9 percent and Aetna Inc (NYSE:AET) posting a 7.5 percent rise.
Investment managers Hotchkis & Wiley Capital Management as well as Cornerstone Advisors Inc each raised their stakes in Anthem while Vulcan Value Partners and Two Sigma Investments increased their bets on UnitedHealth.
Most investment managers released their 13-F filings on Monday and while the information is backward looking, it is watched closely by investors for hints of upcoming trends. The filings also reveal which managers made moves, identifying by name the investors who may have been behind big gyrations.
Not all investors stuck with the insurers, however, with a good number trimming their investments in the run-up to the U.S. election. With most polls calling for Hillary Clinton to win the White House, some investors were concerned she could impose greater regulation on drug companies and curb their price hikes.
Hedge fund Adage trimmed its bet on Humana but held onto 1.1 million shares. Arrowgrass Capital Partners cut its bet by nearly half but still owned 1.9 million shares. And Farallon Capital Management, founded by Tom Steyer, cut its position by 45 percent to 382,000 shares.
Similarly, shares of Valeant Pharmaceuticals (NYSE:VRX) VRX.TO , which drew Clinton's ire during the campaign for enormous price hikes, continue to drop in the last weeks amid fears about its debt load. Mutual fund powerhouse Fidelity Investments cut its Valeant stake by more than half.
But with Trump heading to the White House in January, a number of investors said healthcare stocks, which had been undervalued, could now be poised for robust gains.
Since the end of September, biotech company Celgene (NASDAQ:CELG), whose blockbuster cancer drug Revlimid helped boost earnings, has gained 15.4 percent, making it the sector's top performer.
Two Sigma boosted its investment by 200 percent to own 177 million shares.
Carl Icahn, the activist investor, sold most of his shares in Allergan (NYSE:AGN) Plc just a few months after Pfizer walked away from a plan to merge with the company. Even in the second quarter, a number of investors had trimmed their holdings in Allergan.