The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ceridian HCM Holding Inc. (NYSE:CDAY) based on those filings.
Ceridian HCM Holding Inc. (NYSE:CDAY) shareholders have witnessed an increase in hedge fund sentiment of late. Ceridian HCM Holding Inc. (NYSE:CDAY) was in 28 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 36. There were 26 hedge funds in our database with CDAY holdings at the end of December. Our calculations also showed that CDAY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the new hedge fund action regarding Ceridian HCM Holding Inc. (NYSE:CDAY).
Do Hedge Funds Think CDAY Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in CDAY a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in Ceridian HCM Holding Inc. (NYSE:CDAY), which was worth $608.1 million at the end of the fourth quarter. On the second spot was Ashe Capital which amassed $102.8 million worth of shares. Citadel Investment Group, Echo Street Capital Management, and Alkeon Capital Management 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 Ashe Capital allocated the biggest weight to Ceridian HCM Holding Inc. (NYSE:CDAY), around 7.01% of its 13F portfolio. Nishkama Capital is also relatively very bullish on the stock, setting aside 4.82 percent of its 13F equity portfolio to CDAY.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Nishkama Capital, managed by Ravee Mehta, created the most valuable position in Ceridian HCM Holding Inc. (NYSE:CDAY). Nishkama Capital had $17.9 million invested in the company at the end of the quarter. Robert Karr’s Joho Capital also made a $15.6 million investment in the stock during the quarter. The other funds with brand new CDAY positions are Jack Woodruff’s Candlestick Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Robert Henry Lynch’s Aristeia Capital.
Let’s go over hedge fund activity in other stocks similar to Ceridian HCM Holding Inc. (NYSE:CDAY). These stocks are Medical Properties Trust, Inc. (NYSE:MPW), Texas Pacific Land Trust (NYSE:TPL), Sunrun Inc (NASDAQ:RUN), Canopy Growth Corporation (NYSE:CGC), Opendoor Technologies Inc. (NASDAQ:OPEN), Quanta Services Inc (NYSE:PWR), and RH (NYSE:RH). This group of stocks’ market valuations are closest to CDAY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPW | 23 | 271470 | 7 |
| TPL | 17 | 2556654 | 6 |
| RUN | 41 | 2405187 | -7 |
| CGC | 12 | 157087 | -7 |
| OPEN | 33 | 1046505 | 5 |
| PWR | 33 | 897017 | 0 |
| RH | 50 | 2992390 | 8 |
| Average | 29.9 | 1475187 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $1475 million. That figure was $1098 million in CDAY’s case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 12 bullish hedge fund positions. Ceridian HCM Holding Inc. (NYSE:CDAY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CDAY is 51.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on CDAY, though not to the same extent, as the stock returned 17.7% since the end of Q1 (through July 9th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
