At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not CGI Group Inc (NYSE:GIB) makes for a good investment right now.
CGI Group Inc (NYSE:GIB) was included in the 13F portfolios of 16 hedge funds from our database at the end of September, compared to 15 funds at the end of June. At the end of this article we will also compare GIB to other stocks including Alliance Data Systems Corporation (NYSE:ADS), Motorola Solutions Inc (NYSE:MSI), and Quest Diagnostics Inc (NYSE:DGX) to get a better sense of its popularity.
Follow Groupe C G I Inc (NYSE:GIB)
Follow Groupe C G I Inc (NYSE:GIB)
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.
Mircea Maties/Shutterstock.com
Keeping this in mind, we’re going to analyze the new action surrounding CGI Group Inc (NYSE:GIB).
Hedge fund activity in CGI Group Inc (NYSE:GIB)
Heading into the fourth quarter of 2016, a total of 16 funds tracked by Insider Monkey held long positions in CGI Group, which represents a change of 7% from the second quarter of 2016. On the other hand, there were a total of 14 hedge funds with a bullish position in GIB at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in CGI Group Inc (NYSE:GIB), worth close to $60 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is Eric Sprott’s Sprott Asset Management, which holds a $26.5 million position; 0.9% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Greg Poole’s Echo Street Capital Management, Jim Simons’ Renaissance Technologies, and Joel Greenblatt’s Gotham Asset Management. We should note that Sprott Asset Management is 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.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. PDT Partners, led by Peter Muller, established the most valuable position in CGI Group Inc (NYSE:GIB). PDT Partners had $1.8 million invested in the company at the end of the quarter. Neil Chriss’ Hutchin Hill Capital also initiated a $1.7 million position during the quarter. The other funds with brand new GIB positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Joshua Packwood and Schuster Tanger’s Radix Partners, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CGI Group Inc (NYSE:GIB) but similarly valued. These stocks are Alliance Data Systems Corporation (NYSE:ADS), Motorola Solutions Inc (NYSE:MSI), Quest Diagnostics Inc (NYSE:DGX), and Cenovus Energy Inc (USA) (NYSE:CVE). This group of stocks’ market caps match GIB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADS | 32 | 1479453 | -1 |
| MSI | 28 | 1170738 | -1 |
| DGX | 24 | 349248 | -1 |
| CVE | 20 | 364500 | -3 |
As you can see these stocks had an average of 26 funds with bullish positions and the average amount invested in these stocks was $841 million, which is higher compared to $122 million in GIB’s case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table, while Cenovus Energy Inc (USA) (NYSE:CVE) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks CGI Group Inc (NYSE:GIB) is even less popular than Cenovus Energy Inc (USA) (NYSE:CVE). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none
