Hedge Funds Are Buying Cardinal Financial Corporation (CFNL)

Cardinal Financial Corporation (NASDAQ:CFNL) was in 8 hedge funds’ portfolio at the end of the fourth quarter of 2012. CFNL investors should pay attention to an increase in support from the world’s most elite money managers recently. There were 6 hedge funds in our database with CFNL positions at the end of the previous quarter.

According to most market participants, hedge funds are seen as worthless, old financial tools of years past. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the moguls of this club, around 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total capital, and by paying attention to their top picks, we have uncovered a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 beneficial, optimistic insider trading activity is another way to parse down the investments you’re interested in. There are a number of incentives for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Many academic studies have demonstrated the valuable potential of this method if “monkeys” know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action regarding Cardinal Financial Corporation (NASDAQ:CFNL).

What have hedge funds been doing with Cardinal Financial Corporation (NASDAQ:CFNL)?

At year’s end, a total of 8 of the hedge funds we track were long in this stock, a change of 33% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Jim Simons’s Renaissance Technologies had the biggest position in Cardinal Financial Corporation (NASDAQ:CFNL), worth close to $3.7 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, which held a $2.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Charles Davidson’s Wexford Capital, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

As aggregate interest increased, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the biggest position in Cardinal Financial Corporation (NASDAQ:CFNL). Millennium Management had 1.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.9 million position during the quarter. The only other fund with a new position in the stock is Steven Cohen’s SAC Capital Advisors.

What have insiders been doing with Cardinal Financial Corporation (NASDAQ:CFNL)?

Insider purchases made by high-level executives is particularly usable when the company in focus has seen transactions within the past six months. Over the latest six-month time period, Cardinal Financial Corporation (NASDAQ:CFNL) has seen 2 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Cardinal Financial Corporation (NASDAQ:CFNL). These stocks are Pinnacle Financial Partners (NASDAQ:PNFP), Simmons First National Corporation (NASDAQ:SFNC), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), Community Trust Bancorp, Inc. (NASDAQ:CTBI), and Renasant Corp. (NASDAQ:RNST). This group of stocks are in the regional – southeast banks industry and their market caps resemble CFNL’s market cap.

With the results demonstrated by Insider Monkey’s studies, retail investors should always pay attention to hedge fund and insider trading activity, and Cardinal Financial Corporation (NASDAQ:CFNL) shareholders fit into this picture quite nicely.

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