Should You Add CA, Inc. (CA) to Your Portfolio?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on several financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of CA, Inc. (NASDAQ:CA) based on that data.

So, is CA, Inc. (NASDAQ:CA) ready to rally soon? It looks like, the smart money is reducing their bets on the stock, since the number of bullish hedge fund positions retreated by one lately. At the end of this article we will also compare CA to other stocks including Verisk Analytics, Inc. (NASDAQ:VRSK), Potash Corp./Saskatchewan (USA) (NYSE:POT), and SBA Communications Corporation (NASDAQ:SBAC) to get a better sense of its popularity.

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, let’s view the key action surrounding CA, Inc. (NASDAQ:CA).

Hedge fund activity in CA, Inc. (NASDAQ:CA)

Heading into the fourth quarter of 2016, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on CA, Inc. (NASDAQ:CA), down by 3% from the end of June. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the biggest position in CA, Inc. (NASDAQ:CA), worth close to $111.2 million, accounting for 0.2% of its total 13F portfolio. On AQR Capital Management’s heels is Joe Huber’s Huber Capital Management, with a $79.9 million position; 3.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions include Joel Greenblatt’s Gotham Asset Management, Jim Simons’ Renaissance Technologies, and Anthony Scaramucci’s Skybridge Capital.

Judging by the fact that CA, Inc. (NASDAQ:CA) has faced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that elected to cut their entire stakes between July and September. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the largest position of the 700 funds watched by Insider Monkey, comprising an estimated $14.4 million in call options., and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $4.7 million worth of shares.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CA, Inc. (NASDAQ:CA) but similarly valued. These stocks are Verisk Analytics, Inc. (NASDAQ:VRSK), Potash Corp./Saskatchewan (USA) (NYSE:POT), SBA Communications Corporation (NASDAQ:SBAC), and McCormick & Company, Incorporated (NYSE:MKC). This group of stocks’ market values are closest to CA’s market value.

As you can see these stocks had an average of 26 hedge funds with bullish positions at the end of September and the average amount invested in these stocks was $830 million. That figure was $363 million in CA’s case. SBA Communications Corporation (NASDAQ:SBAC) is the most popular stock in this table. On the other hand Potash Corp./Saskatchewan (USA) (NYSE:POT) is the least popular one with only 18 bullish hedge fund positions. CA, Inc. (NASDAQ:CA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SBA Communications Corporation (NASDAQ:SBAC) might be a better candidate to consider a long position.