Should You Buy Cadence Design Systems Inc (CDNS)?

Cadence Design Systems Inc (NASDAQ:CDNS) was in 24 hedge funds’ portfolio at the end of March. CDNS shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 22 hedge funds in our database with CDNS holdings at the end of the previous quarter.

In the 21st century investor’s toolkit, there are a multitude of gauges investors can use to track stocks. A pair of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can outclass the broader indices by a significant amount (see just how much).

Equally as key, optimistic insider trading activity is another way to parse down the stock market universe. There are a number of motivations for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).

Keeping this in mind, we’re going to take a glance at the key action encompassing Cadence Design Systems Inc (NASDAQ:CDNS).

What have hedge funds been doing with Cadence Design Systems Inc (NASDAQ:CDNS)?

Heading into Q2, a total of 24 of the hedge funds we track were long in this stock, a change of 9% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the most valuable position in Cadence Design Systems Inc (NASDAQ:CDNS). Alkeon Capital Management has a $98.9 million position in the stock, comprising 2.1% of its 13F portfolio. Sitting at the No. 2 spot is Daruma Asset Management, managed by Mariko Gordon, which held a $64.1 million position; 3.3% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Christopher Lord’s Criterion Capital, Jim Simons’s Renaissance Technologies and Donald Chiboucis’s Columbus Circle Investors.

As one would reasonably expect, specific money managers have jumped into Cadence Design Systems Inc (NASDAQ:CDNS) headfirst. Hutchin Hill Capital, managed by Neil Chriss, created the biggest position in Cadence Design Systems Inc (NASDAQ:CDNS). Hutchin Hill Capital had 4.6 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $4.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Brian Ashford-Russell and Tim Woolley’s Polar Capital, Paul Tudor Jones’s Tudor Investment Corp, and Mark A. Nordlicht’s Platinum Management.

What do corporate executives and insiders think about Cadence Design Systems Inc (NASDAQ:CDNS)?

Insider buying is at its handiest when the company in focus has seen transactions within the past six months. Over the last 180-day time frame, Cadence Design Systems Inc (NASDAQ:CDNS) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Cadence Design Systems Inc (NASDAQ:CDNS). These stocks are MICROS Systems, Inc. (NASDAQ:MCRS), CommVault Systems, Inc. (NASDAQ:CVLT), Msci Inc (NYSE:MSCI), Fortinet Inc (NASDAQ:FTNT), and Splunk Inc (NASDAQ:SPLK). All of these stocks are in the application software industry and their market caps resemble CDNS’s market cap.

With the returns demonstrated by our research, retail investors should always pay attention to hedge fund and insider trading activity, and Cadence Design Systems Inc (NASDAQ:CDNS) applies perfectly to this mantra.

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