May 15, 2018 / 9:28 PM / 4 months ago

UPDATE 1-U.S. hedge funds pile into health insurers, ignore Amazon threat

(Adds details of Tiger Global in paragraph 10)

By David Randall

NEW YORK, May 15 (Reuters) - Prominent hedge fund managers appear to have wagered on U.S. health insurers whose shares tumbled after Jeff Bezos, Warren Buffett and Jamie Dimon unveiled plans in January for a joint venture aimed at slashing healthcare costs.

Jana Partners added a new position in Anthem Inc, while Omega Advisors and Tiger Management opened positions in UnitedHealth Group Inc in the first quarter, according to regulatory filings released on Tuesday.

Third Point, meanwhile, added to its stake in Anthem. Shares of the company are 10.5 percent below their high for the year reached in January. Shares of UnitedHealth are 3.1 percent below January highs.

The partnership between Amazon.com Inc, Berkshire Hathaway Inc, and JPMorgan Chase & Co, which together have more than 1 million workers, involves overhaul healthcare for those employees while cutting the three companies' coverage costs. It has not yet made significant progress, but has loomed large in the mind of health insurance company investors.

Buffett, famed for his love of junk food, has said spiraling healthcare costs are responsible for 18 percent of U.S. gross domestic product, up from 5 percent in 1960 and a share he wants to shrink.

"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."

Shares of pharmacy benefits managers Express Scripts Holding Co and CVS Health Corp have slid on speculation that Amazon could enter that business.

But 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.

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 13F filings with the U.S. Securities and Exchange Commission are one of the few public ways of tracking what managers are selling and buying.

The disclosures come 45 days after the end of each quarter and may not reflect current positions.

Large hedge fund managers added to so-called FANG technology stocks during the first quarter even as the broader 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.

Tiger Management added to its positions in Google parent Alphabet Inc and Facebook.

Tiger Global Management added a position in Twitter Inc and upped its position in Amazon and Facebook. Twitter shares are up 36 percent year to date after the company delivered its first-ever quarterly profit in February.

Appaloosa Management LP, run by billionaire David Tepper, sold all of its stake in Apple, which previously made up 7.2 percent of its portfolio. The fund added to its broad bet on energy stocks, taking new positions in the Energy Select SPDR ETF and the SPDR S&P Oil & Gas Exploration and Production ETF.

Overall, hedge funds are up by an average of 0.4 percent for the year to date, according to Hedge Fund Research. The S&P 500 is up 1.2 percent over the same time. (Additional reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Meredith Mazzilli)

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