Celestica Inc. (USA) (NYSE:CLS) was in 9 hedge funds’ portfolio at the end of December. CLS has experienced a decrease in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with CLS positions at the end of the previous quarter.
To most market participants, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we choose to focus on the aristocrats of this group, about 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by tracking their top picks, we have determined a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started 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).
Just as important, positive insider trading sentiment is another way to parse down the financial markets. There are many motivations for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).
With these “truths” under our belt, let’s take a peek at the latest action surrounding Celestica Inc. (USA) (NYSE:CLS).
How are hedge funds trading Celestica Inc. (USA) (NYSE:CLS)?
At year’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.
Of the funds we track, Dreman Value Management, managed by David Dreman, holds the biggest position in Celestica Inc. (USA) (NYSE:CLS). Dreman Value Management has a $7.9 million position in the stock, comprising 0.2% of its 13F portfolio. On Dreman Value Management’s heels is Eric Sprott of Sprott Asset Management, with a $6.9 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include John Thiessen’s Vertex One Asset Management, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.
Seeing as Celestica Inc. (USA) (NYSE:CLS) has faced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their entire stakes at the end of the year. At the top of the heap, Chuck Royce’s Royce & Associates dropped the biggest stake of the “upper crust” of funds we key on, worth close to $1.9 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund said goodbye to about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Celestica Inc. (USA) (NYSE:CLS)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time period, Celestica Inc. (USA) (NYSE:CLS) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Celestica Inc. (USA) (NYSE:CLS). These stocks are Park Electrochemical Corp. (NYSE:PKE), TTM Technologies, Inc. (NASDAQ:TTMI), Plexus Corp. (NASDAQ:PLXS), Benchmark Electronics, Inc. (NYSE:BHE), and Raven Industries, Inc. (NASDAQ:RAVN). This group of stocks are in the printed circuit boards industry and their market caps are similar to CLS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Park Electrochemical Corp. (NYSE:PKE) | 7 | 1 | 0 |
| TTM Technologies, Inc. (NASDAQ:TTMI) | 8 | 0 | 5 |
| Plexus Corp. (NASDAQ:PLXS) | 10 | 0 | 1 |
| Benchmark Electronics, Inc. (NYSE:BHE) | 13 | 0 | 4 |
| Raven Industries, Inc. (NASDAQ:RAVN) | 8 | 0 | 0 |
With the returns demonstrated by the aforementioned time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and Celestica Inc. (USA) (NYSE:CLS) is an important part of this process.
