Not that it needed it. Health care names have rallied 4.7% since the calendar flipped to January, stomping the 1.69% gains that the rest of the S&P 500 have barely eked out. Big hedge funds have actually been positioned really well to take advantage of that upside too: Funds picked up stocks from the health care sector more than any other industry group last quarter.
Thing is, none of their biggest conviction health care buys were the ones that made the headlines yesterday.
Want to know what the "smart money" is buying in 2014? Then we've got to take a closer look at 13F filings.
Institutional investors with more than $100 million in assets are required to file a 13F, a form that breaks down their stock positions for public consumption. From hedge funds to mutual funds to insurance companies, any professional investors who manage more than that $100 million watermark are required to file a 13F.
In total, approximately 3,700 firms file 13F forms each quarter, and by comparing one quarter's filing to another, we can see how any single fund manager is moving their portfolio around. While the data is generally delayed by about a quarter, that's not necessarily a bad thing. Research shows that applying a lag to institutional holdings can generate positive alpha in some cases. That's all the more reason to crack open the moves being made with pro investors' $19.3 trillion under management. It's early in 13F filing season still, and that means we're getting an early sneak peek at the few names institutional investors love right now.
Today, we'll focus on hedge funds' five favorite health care stocks.