We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards CACI International Inc (NYSE:CACI).
CACI International Inc (NYSE:CACI) investors should be aware of an increase in support from the world’s most elite money managers of late. CACI International Inc (NYSE:CACI) was in 34 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with CACI holdings at the end of March. Our calculations also showed that CACI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at present, We hone in on the top tier of this club, around 850 funds. Most estimates calculate that this group of people oversee the lion’s share of all hedge funds’ total capital, and by watching their best picks, Insider Monkey has come up with numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to review the new hedge fund action encompassing CACI International Inc (NYSE:CACI).
What have hedge funds been doing with CACI International Inc (NYSE:CACI)?
Heading into the third quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CACI over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Horizon Asset Management held the most valuable stake in CACI International Inc (NYSE:CACI), which was worth $85.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $68.3 million worth of shares. Millennium Management, Citadel Investment Group, and Scopus Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lunia Capital allocated the biggest weight to CACI International Inc (NYSE:CACI), around 3.9% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 3.08 percent of its 13F equity portfolio to CACI.
As aggregate interest increased, key money managers have jumped into CACI International Inc (NYSE:CACI) headfirst. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), established the largest position in CACI International Inc (NYSE:CACI). Schonfeld Strategic Advisors had $8 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $3 million position during the quarter. The following funds were also among the new CACI investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Asad Rahman and Aman Kapadia’s Akaris Global Partners, and Seth Cogswell’s Running Oak Capital.
Let’s now review hedge fund activity in other stocks similar to CACI International Inc (NYSE:CACI). These stocks are Pearson PLC (NYSE:PSO), Arrow Electronics, Inc. (NYSE:ARW), Quanta Services Inc (NYSE:PWR), BWX Technologies Inc (NYSE:BWXT), Reinsurance Group of America Inc (NYSE:RGA), Douglas Emmett, Inc. (NYSE:DEI), and Dunkin Brands Group Inc (NASDAQ:DNKN). This group of stocks’ market caps are closest to CACI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSO | 7 | 14870 | -1 |
| ARW | 29 | 531930 | 6 |
| PWR | 31 | 624315 | 3 |
| BWXT | 27 | 141453 | 3 |
| RGA | 33 | 240555 | 3 |
| DEI | 27 | 699337 | 5 |
| DNKN | 35 | 416764 | 1 |
| Average | 27 | 381318 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $381 million. That figure was $396 million in CACI’s case. Dunkin Brands Group Inc (NASDAQ:DNKN) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 7 bullish hedge fund positions. CACI International Inc (NYSE:CACI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CACI is 88.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately CACI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CACI were disappointed as the stock returned -3.9% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Caci International Inc (NYSE:CACI)
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Disclosure: None. This article was originally published at Insider Monkey.
