CBIZ, Inc. (CBZ): Insiders Are Buying, Should You?

CBIZ, Inc. (NYSE:CBZ) was in 13 hedge funds’ portfolio at the end of the first quarter of 2013. CBZ investors should be aware of an increase in support from the world’s most elite money managers recently. There were 10 hedge funds in our database with CBZ positions at the end of the previous quarter.

According to most market participants, hedge funds are assumed to be slow, outdated financial tools of years past. While there are over 8000 funds in operation today, we at Insider Monkey hone in on the aristocrats of this club, about 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by keeping an eye on their highest performing investments, we have determined a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, bullish insider trading sentiment is another way to parse down the investments you’re interested in. There are plenty of incentives for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

Consequently, we’re going to take a gander at the key action surrounding CBIZ, Inc. (NYSE:CBZ).

What have hedge funds been doing with CBIZ, Inc. (NYSE:CBZ)?

At the end of the first quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 30% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially.

When looking at the hedgies we track, P2 Capital Partners, managed by Claus Moller, holds the largest position in CBIZ, Inc. (NYSE:CBZ). P2 Capital Partners has a $15.4 million position in the stock, comprising 2.6% of its 13F portfolio. Sitting at the No. 2 spot is Cardinal Capital, managed by Amy Minella, which held a $14.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Chuck Royce’s Royce & Associates, David Dreman’s Dreman Value Management and Robert B. Gillam’s McKinley Capital Management.

As aggregate interest increased, key money managers have been driving this bullishness. Dreman Value Management, managed by David Dreman, created the most outsized position in CBIZ, Inc. (NYSE:CBZ). Dreman Value Management had 3.1 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new CBZ investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.

What have insiders been doing with CBIZ, Inc. (NYSE:CBZ)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past six months. Over the last 180-day time frame, CBIZ, Inc. (NYSE:CBZ) has seen 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to CBIZ, Inc. (NYSE:CBZ). These stocks are Consolidated Graphics, Inc. (NYSE:CGX), Furiex Pharmaceuticals Inc (NASDAQ:FURX), Carbonite Inc (NASDAQ:CARB), Net 1 UEPS Technologies Inc (NASDAQ:UEPS), and Safeguard Scientifics, Inc (NYSE:SFE). All of these stocks are in the business services industry and their market caps are closest to CBZ’s market cap.

With the returns demonstrated by the aforementioned time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and CBIZ, Inc. (NYSE:CBZ) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds