Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Chicago Bridge & Iron Company N.V. (NYSE:CBI) shareholders have witnessed a decrease in hedge fund sentiment recently. CBI was in 27 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with CBI positions at the end of the previous quarter. At the end of this article we will also compare CBI to other stocks including Tableau Software Inc (NYSE:DATA), Synovus Financial Corp. (NYSE:SNV), and The Hanover Insurance Group, Inc. (NYSE:THG) to get a better sense of its popularity.
Follow Chicago Bridge & Iron Co N V (NYSE:CBI)
Follow Chicago Bridge & Iron Co N V (NYSE:CBI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How are hedge funds trading Chicago Bridge & Iron Company N.V. (NYSE:CBI)?
Heading into the fourth quarter of 2016, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a 10% dip from the previous quarter, as hedge fund ownership has remained in a narrow range between 24 and 30 funds for over a year. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in Chicago Bridge & Iron Company N.V. (NYSE:CBI). Citadel Investment Group has an $82.7 million position in the stock. Coming in second is Alyeska Investment Group, led by Anand Parekh, holding a $53.9 million position. Remaining members of the smart money that are bullish comprise Steve Cohen’s Point72 Asset Management and Paul J. Isaac’s Arbiter Partners Capital Management.
Because Chicago Bridge & Iron Company N.V. (NYSE:CBI) has witnessed bearish sentiment from the smart money, it’s easy to see that there is a sect of hedge funds that slashed their full holdings last quarter. It’s worth mentioning that Jim Simons’ Renaissance Technologies dropped the largest stake of all the hedgies watched by Insider Monkey, worth an estimated $19.5 million in stock, and Jonathan Barrett and Paul Segal’s Luminus Management was right behind this move, as the fund dropped about $8.6 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Chicago Bridge & Iron Company N.V. (NYSE:CBI). We will take a look at Tableau Software Inc (NYSE:DATA), Synovus Financial Corp. (NYSE:SNV), The Hanover Insurance Group, Inc. (NYSE:THG), and SINA Corp (NASDAQ:SINA). This group of stocks’ market valuations match CBI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DATA | 29 | 898953 | -5 |
| SNV | 21 | 454718 | -1 |
| THG | 16 | 172459 | -3 |
| SINA | 33 | 796653 | 12 |
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $581 million. That figure was $337 million in CBI’s case. SINA Corp (NASDAQ:SINA) is the most popular stock in this table. On the other hand The Hanover Insurance Group, Inc. (NYSE:THG) is the least popular one with only 16 bullish hedge fund positions. Chicago Bridge & Iron Company N.V. (NYSE:CBI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SINA might be a better candidate to consider taking a long position in.
Disclosure: None
