Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Conduent Incorporated (NYSE:CNDT).
Conduent Incorporated (NYSE:CNDT) was in 30 hedge funds’ portfolios at the end of the third quarter of 2019. CNDT investors should be aware of an increase in enthusiasm from smart money recently. There were 27 hedge funds in our database with CNDT holdings at the end of the previous quarter. Our calculations also showed that CNDT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Carl Icahn of Icahn Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action encompassing Conduent Incorporated (NYSE:CNDT).
How are hedge funds trading Conduent Incorporated (NYSE:CNDT)?
Heading into the fourth quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2019. By comparison, 34 hedge funds held shares or bullish call options in CNDT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Icahn Capital held the most valuable stake in Conduent Incorporated (NYSE:CNDT), which was worth $237.3 million at the end of the third quarter. On the second spot was Iridian Asset Management which amassed $49.2 million worth of shares. Renaissance Technologies, D E Shaw, and Empyrean Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Clearline Capital allocated the biggest weight to Conduent Incorporated (NYSE:CNDT), around 3.18% of its portfolio. Icahn Capital is also relatively very bullish on the stock, setting aside 0.92 percent of its 13F equity portfolio to CNDT.
Now, some big names have been driving this bullishness. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, created the biggest position in Conduent Incorporated (NYSE:CNDT). Empyrean Capital Partners had $13 million invested in the company at the end of the quarter. Daniel S. Och (founder)’s Sculptor Capital also initiated a $5.8 million position during the quarter. The following funds were also among the new CNDT investors: Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group, and Simon Sadler’s Segantii Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Conduent Incorporated (NYSE:CNDT) but similarly valued. These stocks are Helios Technologies, Inc. (NASDAQ:HLIO), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Veritex Holdings Inc (NASDAQ:VBTX), and Independence Realty Trust Inc (NYSEMKT:IRT). This group of stocks’ market caps are similar to CNDT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLIO | 3 | 75356 | -1 |
| SBCF | 6 | 22958 | 0 |
| VBTX | 9 | 85782 | 1 |
| IRT | 12 | 95303 | 4 |
| Average | 7.5 | 69850 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $418 million in CNDT’s case. Independence Realty Trust Inc (NYSEMKT:IRT) is the most popular stock in this table. On the other hand Helios Technologies, Inc. (NASDAQ:HLIO) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Conduent Incorporated (NYSE:CNDT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CNDT, though not to the same extent, as the stock returned 8.8% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
