Do Hedge Funds and Insiders Love Cenveo, Inc. (CVO)?

Should Cenveo, Inc. (NYSE:CVO) investors track the following data?

If you were to ask many investors, hedge funds are perceived as overrated, outdated investment vehicles of an era lost to time. Although there are In excess of 8,000 hedge funds in operation currently, this site looks at the aristocrats of this club, about 525 funds. Analysts calculate that this group controls the lion’s share of the smart money’s total capital, and by tracking their highest performing investments, we’ve uncovered a few investment strategies that have historically outperformed the S&P 500. 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as key, bullish insider trading activity is another way to look at the stock market universe. As the old adage goes: there are a number of reasons for an insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

Thus, let’s analyze the newest info about Cenveo, Inc. (NYSE:CVO).

What have hedge funds been doing with Cenveo, Inc. (NYSE:CVO)?

In preparation for the third quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of -20% from the first quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly.

According to our 13F database, Phil Frohlich’s Prescott Group Capital Management had the largest position in Cenveo, Inc. (NYSE:CVO), worth close to $3.7 million, comprising 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is SAC Capital Advisors, managed by Steven Cohen, which held a $2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Curtis Schenker and Craig Effron’s Scoggin and Andy Redleaf’s Whitebox Advisors.

Since Cenveo, Inc. (NYSE:CVO) has experienced bearish sentiment from the smart money’s best and brightest, it’s easy to see that there was a specific group of funds that slashed their entire stakes heading into Q2. At the top of the heap, Ron Gutfleish’s Elm Ridge Capital sold off the largest investment of the “upper crust” of funds we watch, comprising close to $6.9 million in stock, and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q2.

How have insiders been trading Cenveo, Inc. (NYSE:CVO)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time period, Cenveo, Inc. (NYSE:CVO) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators 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). This group of stocks are the members of the business services industry and their market caps are similar to CVO’s market cap.