Is Corporate Executive Board Company (CEB) A Good Stock To Buy?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively, during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Corporate Executive Board Company (NYSE:CEB).

The Corporate Executive Board Company has experienced a decrease in support from the world’s most elite money managers lately. 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 Taylor Morrison Home Corp (NYSE:TMHC), XPO Logistics Inc (NYSE:XPO), and Convergys Corporation (NYSE:CVG) to gather more data points.

In today’s marketplace there are numerous metrics shareholders can use to value stocks. A pair of the less known metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the S&P 500 by a solid margin (see the details here).

Keeping this in mind, let’s take a gander at the new action regarding The Corporate Executive Board Company (NYSE:CEB).

Hedge fund activity in The Corporate Executive Board Company (NYSE:CEB)

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the most valuable position in The Corporate Executive Board Company (NYSE:CEB). Royce & Associates has a $14.3 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Gotham Asset Management, led by Joel Greenblatt, holding a $12.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Lee Munder’s Lee Munder Capital Group, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.

Because The Corporate Executive Board Company (NYSE:CEB) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who were dropping their entire stakes heading into Q4. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management cut the biggest stake of all the hedgies tracked by Insider Monkey, worth about $4.4 million in stock. Richard Driehaus’s fund, Driehaus Capital, also dropped its stock, about $1.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Corporate Executive Board Company (NYSE:CEB) but similarly valued. These stocks are Taylor Morrison Home Corp (NYSE:TMHC), XPO Logistics Inc (NYSE:XPO), Convergys Corporation (NYSE:CVG), and F.N.B. Corp (NYSE:FNB). This group of stocks’ market values resemble CEB’s market value.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $301 million. By comparison, The Corporate Executive Board Company (NYSE:CEB) is the least popular stock in this group and the funds we track amassed just $61 million worth of its stock at the end of September. 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.