Compass Diversified Holdings (CODI): Insiders Are Buying, Should You?

Compass Diversified Holdings (NYSE:CODI) was in 7 hedge funds’ portfolio at the end of March. CODI investors should be aware of an increase in support from the world’s most elite money managers of late. There were 6 hedge funds in our database with CODI positions at the end of the previous quarter.

To the average investor, there are a multitude of methods market participants can use to track Mr. Market. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a superb amount (see just how much).

Equally as important, bullish insider trading sentiment is another way to break down the stock market universe. There are lots of incentives for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).

With all of this in mind, it’s important to take a gander at the key action surrounding Compass Diversified Holdings (NYSE:CODI).

How are hedge funds trading Compass Diversified Holdings (NYSE:CODI)?

At Q1’s end, a total of 7 of the hedge funds we track held long positions in this stock, a change of 17% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the most valuable position in Compass Diversified Holdings (NYSE:CODI), worth close to $3.4 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Matthew Hulsizer of PEAK6 Capital Management, with a $2.9 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. LMR Partners, managed by Ben Levine Andrew Manuel and Stefan Renold, initiated the most valuable position in Compass Diversified Holdings (NYSE:CODI). LMR Partners had 0.2 million invested in the company at the end of the quarter.

What have insiders been doing with Compass Diversified Holdings (NYSE:CODI)?

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time frame, Compass Diversified Holdings (NYSE:CODI) has seen 5 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Compass Diversified Holdings (NYSE:CODI). These stocks are DICE HOLDINGS, INC. (NYSE:DHX), Korn/Ferry International (NYSE:KFY), Trueblue Inc (NYSE:TBI), Kelly Services, Inc. (NASDAQ:KELYA), and AMN Healthcare Services, Inc. (NYSE:AHS). This group of stocks are the members of the staffing & outsourcing services industry and their market caps resemble CODI’s market cap.