Is Corrections Corp Of America (NYSE:CXW) a buy here? The smart money is in an optimistic mood. The number of long hedge fund positions advanced by 1 lately.
In the eyes of most stock holders, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey hone in on the leaders of this club, about 450 funds. It is estimated that this group has its hands on the majority of all hedge funds’ total capital, and by paying attention to their top equity investments, we have identified a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, bullish insider trading sentiment 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 insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).
With all of this in mind, we’re going to take a gander at the key action encompassing Corrections Corp Of America (NYSE:CXW).
What have hedge funds been doing with Corrections Corp Of America (NYSE:CXW)?
At the end of the first quarter, a total of 26 of the hedge funds we track were bullish in this stock, a change of 4% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully.
According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the largest position in Corrections Corp Of America (NYSE:CXW). Renaissance Technologies has a $40.8 million position in the stock, comprising 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Millennium Management, managed by Israel Englander, which held a $32.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Ric Dillon’s Diamond Hill Capital, Neil Chriss’s Hutchin Hill Capital and Greg Poole’s Echo Street Capital Management.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. CR Intrinsic Investors, managed by SAC Subsidiary, created the most valuable position in Corrections Corp Of America (NYSE:CXW). CR Intrinsic Investors had 9.8 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $8.5 million position during the quarter. The following funds were also among the new CXW investors: James Dondero’s Highland Capital Management, Clint Carlson’s Carlson Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
How have insiders been trading Corrections Corp Of America (NYSE:CXW)?
Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time period, Corrections Corp Of America (NYSE:CXW) has seen zero unique insiders purchasing, and 12 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Corrections Corp Of America (NYSE:CXW). These stocks are FTI Consulting, Inc. (NYSE:FCN), Booz Allen Hamilton Holding Corporation (NYSE:BAH), The Corporate Executive Board Company (NYSE:CEB), Towers Watson & Co (NYSE:TW), and Genpact Limited (NYSE:G). This group of stocks are the members of the management services industry and their market caps resemble CXW’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| FTI Consulting, Inc. (NYSE:FCN) | 7 | 0 | 1 |
| Booz Allen Hamilton Holding Corporation (NYSE:BAH) | 5 | 0 | 7 |
| The Corporate Executive Board Company (NYSE:CEB) | 9 | 0 | 3 |
| Towers Watson & Co (NYSE:TW) | 19 | 0 | 5 |
| Genpact Limited (NYSE:G) | 17 | 0 | 9 |
With the returns demonstrated by the aforementioned studies, retail investors must always keep an eye on hedge fund and insider trading activity, and Corrections Corp Of America (NYSE:CXW) shareholders fit into this picture quite nicely.
