CACI International Inc (CACI): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do? – The Shaw Group Inc. (SHAW), Tetra Tech, Inc. (TTEK)

Is CACI International Inc (NYSE:CACI) a bargain? The smart money is becoming less hopeful. The number of bullish hedge fund positions went down by 1 in recent months.

According to most market participants, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, we choose to focus on the leaders of this club, around 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by watching their top investments, we have unearthed a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is another way to parse down the investments you’re interested in. There are lots of stimuli for an executive to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this method if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a gander at the recent action regarding CACI International Inc (NYSE:CACI).

Hedge fund activity in CACI International Inc (NYSE:CACI)

In preparation for this year, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially.

According to our comprehensive database, Blue Harbour Group, managed by Clifton S. Robbins, holds the most valuable position in CACI International Inc (NYSE:CACI). Blue Harbour Group has a $116 million position in the stock, comprising 13% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $14 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group and Wallace Weitz’s Wallace R. Weitz & Co..

Judging by the fact that CACI International Inc (NYSE:CACI) has experienced declining sentiment from the smart money, we can see that there is a sect of fund managers that elected to cut their positions entirely last quarter. Interestingly, David Dreman’s Dreman Value Management dumped the biggest stake of the 450+ funds we monitor, totaling about $26 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dumped about $3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Insider trading activity in CACI International Inc (NYSE:CACI)

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time period, CACI International Inc (NYSE:CACI) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to CACI International Inc (NYSE:CACI). These stocks are AECOM Technology Corp (NYSE:ACM), The Shaw Group Inc. (NYSE:SHAW), Mistras Group, Inc. (NYSE:MG), Stantec Inc. (USA) (NYSE:STN), and Tetra Tech, Inc. (NASDAQ:TTEK). This group of stocks are the members of the technical services industry and their market caps resemble CACI’s market cap.

With the returns demonstrated by the aforementioned tactics, everyday investors must always monitor hedge fund and insider trading sentiment, and CACI International Inc (NYSE:CACI) is an important part of this process.

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