Hedge Funds Are Buying CAI International Inc (CAP)

CAI International Inc (NYSE:CAP) shareholders have witnessed an increase in hedge fund interest in recent months.

To most market participants, hedge funds are perceived as worthless, old investment vehicles of the past. While there are more than 8000 funds with their doors open today, we look at the crème de la crème of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by watching their highest performing picks, we have spotted a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outpaced the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is another way to break down the world of equities. Just as you’d expect, there are a variety of reasons for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this method if “monkeys” know where to look (learn more here).

With these “truths” under our belt, let’s take a glance at the key action surrounding CAI International Inc (NYSE:CAP).

What have hedge funds been doing with CAI International Inc (NYSE:CAP)?

Heading into 2013, a total of 7 of the hedge funds we track were bullish in this stock, a change of 250% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Israel Englander’s Millennium Management had the biggest position in CAI International Inc (NYSE:CAP), worth close to $7.3 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Harvest Capital Strategies, managed by Joseph A. Jolson, which held a $3.3 million position; 0.6% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Anil Stevens and Glenn Shapiro’s Parameter Capital Management, SAC Subsidiary’s Sigma Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Consequently, some big names have been driving this bullishness. Parameter Capital Management, managed by Anil Stevens and Glenn Shapiro, initiated the largest position in CAI International Inc (NYSE:CAP). Parameter Capital Management had 1.6 million invested in the company at the end of the quarter. SAC Subsidiary’s Sigma Capital Management also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new CAP investors: John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw, and Steven Cohen’s SAC Capital Advisors.

How have insiders been trading CAI International Inc (NYSE:CAP)?

Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, CAI International Inc (NYSE:CAP) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to CAI International Inc (NYSE:CAP). These stocks are Aircastle Limited (NYSE:AYR), Electro Rent Corporation (NASDAQ:ELRC), Fly Leasing Ltd(ADR) (NYSE:FLY), seacube container leasing ltd (NYSE:BOX), and McGrath RentCorp (NASDAQ:MGRC). All of these stocks are in the rental & leasing services industry and their market caps match CAP’s market cap.

With the results demonstrated by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and CAI International Inc (NYSE:CAP) applies perfectly to this mantra.

Click here to learn why you should track hedge funds