Hedge Funds Are Selling Canadian National Railway (USA) (CNI)

What’s a smart Canadian National Railway (USA) (NYSE:CNI) investor to do?

To the average investor, there are many gauges shareholders can use to analyze the equity markets. A pair of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best money managers can outpace their index-focused peers by a healthy amount (see just how much).

Equally as useful, optimistic insider trading sentiment is another way to analyze the stock market universe. Obviously, there are lots of incentives for a corporate insider to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if “monkeys” know where to look (learn more here).

What’s more, it’s important to study the latest info surrounding Canadian National Railway (USA) (NYSE:CNI).

How have hedgies been trading Canadian National Railway (USA) (NYSE:CNI)?

Heading into Q3, a total of 13 of the hedge funds we track were bullish in this stock, a change of -28% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially.

Out of the hedge funds we follow, Michael Larson’s Bill & Melinda Gates Foundation Trust had the biggest position in Canadian National Railway (USA) (NYSE:CNI), worth close to $833 million, comprising 4.7% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which held a $194 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Daniel Bubis’s Tetrem Capital Management, Jim Simons’s Renaissance Technologies and Ken Fisher’s Fisher Asset Management.

Because Canadian National Railway (USA) (NYSE:CNI) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that slashed their entire stakes at the end of the second quarter. Interestingly, Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of the “upper crust” of funds we track, valued at close to $12.1 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $4.8 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds at the end of the second quarter.

What do corporate executives and insiders think about Canadian National Railway (USA) (NYSE:CNI)?

Legal insider trading, particularly when it’s bullish, is most useful when the company in question has seen transactions within the past six months. Over the latest half-year time frame, Canadian National Railway (USA) (NYSE:CNI) has experienced 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 Canadian National Railway (USA) (NYSE:CNI). These stocks are Kansas City Southern (NYSE:KSU), Canadian Pacific Railway Limited (USA) (NYSE:CP), CSX Corporation (NYSE:CSX), Norfolk Southern Corp. (NYSE:NSC), and Union Pacific Corporation (NYSE:UNP). This group of stocks are the members of the railroads industry and their market caps are closest to CNI’s market cap.