Is CRA International, Inc. (NASDAQ:CRAI) a buy here? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets rose by 1 in recent months.
According to most shareholders, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds trading today, we look at the moguls of this club, close to 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by tracking their top stock picks, we have spotted a few 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 per annum 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 outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as integral, optimistic insider trading sentiment is another way to parse down the world of equities. Obviously, there are a variety of stimuli for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this strategy if shareholders understand what to do (learn more here).
With these “truths” under our belt, let’s take a peek at the recent action regarding CRA International, Inc. (NASDAQ:CRAI).
How are hedge funds trading CRA International, Inc. (NASDAQ:CRAI)?
Heading into 2013, a total of 5 of the hedge funds we track held long positions in this stock, a change of 25% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in CRA International, Inc. (NASDAQ:CRAI), worth close to $31.5 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Jeffrey Vinik of Vinik Asset Management, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw.
Consequently, specific money managers have been driving this bullishness. Vinik Asset Management, managed by Jeffrey Vinik, created the largest position in CRA International, Inc. (NASDAQ:CRAI). Vinik Asset Management had 0.5 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.3 million position during the quarter.
Insider trading activity in CRA International, Inc. (NASDAQ:CRAI)
Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past half-year. Over the latest six-month time period, CRA International, Inc. (NASDAQ:CRAI) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to CRA International, Inc. (NASDAQ:CRAI). These stocks are ICF International Inc (NASDAQ:ICFI), Resources Connection, Inc. (NASDAQ:RECN), Standard Parking Corporation (NASDAQ:STAN), Hill International Inc (NYSE:HIL), and The Hackett Group, Inc. (NASDAQ:HCKT). This group of stocks are in the management services industry and their market caps are closest to CRAI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ICF International Inc (NASDAQ:ICFI) | 9 | 0 | 1 |
| Resources Connection, Inc. (NASDAQ:RECN) | 13 | 0 | 2 |
| Standard Parking Corporation (NASDAQ:STAN) | 2 | 2 | 11 |
| Hill International Inc (NYSE:HIL) | 1 | 0 | 2 |
| The Hackett Group, Inc. (NASDAQ:HCKT) | 5 | 0 | 0 |
With the results demonstrated by our research, retail investors should always watch hedge fund and insider trading activity, and CRA International, Inc. (NASDAQ:CRAI) shareholders fit into this picture quite nicely.
