Cenveo, Inc. (CVO): Hedge Funds and Insiders Are Bullish, What Should You Do? – Reis Inc (NASDAQ:REIS), Acquity Group Ltd (AQ), Asta Funding, Inc. (ASFI)

Cenveo, Inc. (NYSE:CVO) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months.

If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the bigwigs of this group, around 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by monitoring their highest performing investments, we have formulated a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as beneficial, bullish insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are a variety of reasons for an upper level exec to downsize shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

Now, it’s important to take a gander at the latest action encompassing Cenveo, Inc. (NYSE:CVO).

What does the smart money think about Cenveo, Inc. (NYSE:CVO)?

In preparation for this year, a total of 11 of the hedge funds we track held long positions in this stock, a change of 22% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Elm Ridge Capital, managed by Ron Gutfleish, holds the biggest position in Cenveo, Inc. (NYSE:CVO). Elm Ridge Capital has a $11 million position in the stock, comprising 1.2% of its 13F portfolio. On Elm Ridge Capital’s heels is SAC Capital Advisors, managed by Steven Cohen, which held a $3 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Phil Frohlich’s Prescott Group Capital Management, D. E. Shaw’s D E Shaw and Craig C. Albert’s Sheffield Asset Management.

As one would reasonably expect, key hedge funds have jumped into Cenveo, Inc. (NYSE:CVO) headfirst. Prescott Group Capital Management, managed by Phil Frohlich, created the largest position in Cenveo, Inc. (NYSE:CVO). Prescott Group Capital Management had 2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

What do corporate executives and insiders think about Cenveo, Inc. (NYSE:CVO)?

Insider buying is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time period, Cenveo, Inc. (NYSE:CVO) has experienced 8 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Cenveo, Inc. (NYSE:CVO). These stocks are Collectors Universe, Inc. (NASDAQ:CLCT), Digital Generation Inc (NASDAQ:DGIT), Reis Inc (NASDAQ:REIS), Acquity Group Ltd (NYSEAMEX:AQ), and Asta Funding, Inc. (NASDAQ:ASFI). All of these stocks are in the business services industry and their market caps resemble CVO’s market cap.