Is Compass Diversified Holdings (NYSE:CODI) a healthy stock for your portfolio? Prominent investors are taking an optimistic view. The number of long hedge fund bets inched up by 2 lately.
According to most shareholders, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the leaders of this club, about 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by watching their top equity investments, we have unearthed a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 (see the details here).
Equally as integral, positive insider trading activity is another way to parse down the marketplace. Just as you’d expect, there are a number of motivations for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).
With all of this in mind, let’s take a glance at the recent action encompassing Compass Diversified Holdings (NYSE:CODI).
How have hedgies been trading Compass Diversified Holdings (NYSE:CODI)?
At the end of the fourth quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of 67% from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, John Overdeck and David Siegel’s Two Sigma Advisors had the biggest position in Compass Diversified Holdings (NYSE:CODI), worth close to $1.3 million, comprising less than 0.1%% of its total 13F portfolio. On Two Sigma Advisors’s heels is Jim Simons of Renaissance Technologies, with a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include D. E. Shaw’s D E Shaw, Bill Miller’s Legg Mason Capital Management and Israel Englander’s Millennium Management.
How have insiders been trading Compass Diversified Holdings (NYSE:CODI)?
Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time period, Compass Diversified Holdings (NYSE:CODI) has experienced 7 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 Compass Diversified Holdings (NYSE:CODI). These stocks are DICE HOLDINGS, INC. (NYSE:DHX), Korn/Ferry International (NYSE:KFY), Trueblue Inc (NYSE:TBI), Kelly Services, Inc. (NASDAQ:KELYA), and AMN Healthcare Services, Inc. (NYSE:AHS). This group of stocks belong to the staffing & outsourcing services industry and their market caps match CODI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| DICE HOLDINGS, INC. (NYSE:DHX) | 8 | 0 | 2 |
| Korn/Ferry International (NYSE:KFY) | 12 | 0 | 0 |
| Trueblue Inc (NYSE:TBI) | 7 | 0 | 10 |
| Kelly Services, Inc. (NASDAQ:KELYA) | 10 | 0 | 1 |
| AMN Healthcare Services, Inc. (NYSE:AHS) | 15 | 1 | 8 |
With the returns demonstrated by the aforementioned research, retail investors should always watch hedge fund and insider trading activity, and Compass Diversified Holdings (NYSE:CODI) shareholders fit into this picture quite nicely.
