It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like CDI Corp. (NYSE:CDI).
CDI Corp. (NYSE:CDI) was in 6 hedge funds’ portfolios at the end of September. CDI investors should pay attention to a decrease in support from the world’s most successful money managers recently. There were 9 hedge funds in our database with CDI positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sequans Communications SA ADR (NYSE:SQNS), GSV Capital Corp (NASDAQ:GSVC), and Edgewater Technology Inc. (NASDAQ:EDGW) to gather more data points.
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Follow Cdi Corp (NYSE:CDI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to take a look at the recent action surrounding CDI Corp. (NYSE:CDI).
Hedge fund activity in CDI Corp. (NYSE:CDI)
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a plunge of 33% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in CDI at the beginning of this year. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, which is one of the largest hedge funds in the world, has the most valuable position in CDI Corp. (NYSE:CDI), worth close to $3.9 million. Sitting at the No. 2 spot is David E. Shaw’s D E Shaw, with a $0.9 million position. Some other members of the smart money that are bullish include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. Intriguingly, David Brown’s Hawk Ridge Management cut the largest investment of all the hedgies studied by Insider Monkey, valued at about $0.9 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $0.3 million worth of CDI shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CDI Corp. (NYSE:CDI) but similarly valued. We will take a look at Sequans Communications SA ADR (NYSE:SQNS), GSV Capital Corp (NASDAQ:GSVC), Edgewater Technology Inc. (NASDAQ:EDGW), and Trans World Entertainment Corporation (NASDAQ:TWMC). All of these stocks’ market caps match CDI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SQNS | 5 | 12683 | 4 |
| GSVC | 5 | 779 | 1 |
| EDGW | 4 | 29026 | -1 |
| TWMC | 3 | 8307 | 0 |
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $6 million in CDI’s case. Sequans Communications SA ADR (NYSE:SQNS) is the most popular stock in this table. On the other hand Trans World Entertainment Corporation (NASDAQ:TWMC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks CDI Corp. (NYSE:CDI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
