You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Convergys Corporation (NYSE:CVG) a good investment now? Money managers are taking a bullish view. The number of long hedge fund positions advanced by 2 lately. At the end of this article we will also compare CVG to other stocks including F.N.B. Corp (NYSE:FNB), Sunedison Inc (NYSE:SUNE), and Chemed Corporation (NYSE:CHE) to get a better sense of its popularity.
Follow Convergys Corp (NYSE:CVG)
Follow Convergys Corp (NYSE:CVG)
According to most shareholders, hedge funds are seen as slow, outdated investment vehicles of years past. While there are greater than 8,000 funds in operation at the moment, we hone in on the elite of this group, about 700 funds. These money managers manage the majority of the hedge fund industry’s total asset base, and by shadowing their inimitable investments, Insider Monkey has found many investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, we’re going to take a glance at the new action regarding Convergys Corporation (NYSE:CVG).
How have hedgies been trading Convergys Corporation (NYSE:CVG)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 11% increase from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or had already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Convergys Corporation (NYSE:CVG). AQR Capital Management has a $36.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting in the 2 spot is Gotham Asset Management, led by Joel Greenblatt, holding a $30.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Amy Minella’s Cardinal Capital, Chuck Royce’s Royce & Associates, and D E Shaw.
As aggregate interest increased, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Convergys Corporation (NYSE:CVG). Arrowstreet Capital had $6.7 million invested in the company at the end of the quarter. Ken Gray and Steve Walsh’s Bryn Mawr Capital also made a $2.2 million investment in the stock during the quarter. The other funds with brand new CVG positions are Roger Ibbotson’s Zebra Capital Management, Glenn Russell Dubin’s Highbridge Capital Management, and David Dreman’s Dreman Value Management.
Let’s check out hedge fund activity in other stocks similar to Convergys Corporation (NYSE:CVG). These stocks are F.N.B. Corp (NYSE:FNB), Sunedison Inc (NYSE:SUNE), Chemed Corporation (NYSE:CHE), and FS Investment Corporation (NYSE:FSIC). This group of stocks’ market values are closest to CVG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNB | 12 | 57118 | 3 |
| SUNE | 73 | 1056855 | -20 |
| CHE | 14 | 190086 | 3 |
| FSIC | 8 | 9735 | 0 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $148 million in CVG’s case. Sunedison Inc (NYSE:SUNE) is the most popular stock in this table. On the other hand FS Investment Corporation (NYSE:FSIC) is the least popular one with only 8 bullish hedge fund positions. Convergys Corporation (NYSE:CVG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SUNE might be a better candidate to consider a long position in.
