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Cadence Design Systems Inc (CDNS): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

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Now, according to many traders, hedge funds are viewed as bloated, old investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds with their doors open today, this site looks at the moguls of this group, close to 525 funds. Analysts calculate that this group oversees the lion’s share of the smart money’s total capital, and by tracking their highest performing equity investments, we’ve deciphered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, optimistic insider trading activity is a second way to analyze the marketplace. There are a number of incentives for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).

Cadence Design Systems Inc (NASDAQ:CDNS)

Thus, we’re going to study the recent info surrounding Cadence Design Systems Inc (NASDAQ:CDNS).

Hedge fund activity in Cadence Design Systems Inc (NASDAQ:CDNS)

At the end of the second quarter, a total of 21 of the hedge funds we track were bullish in this stock, a change of -13% from the first quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.

Out of the hedge funds we follow, Alkeon Capital Management, managed by Panayotis Sparaggis, holds the biggest position in Cadence Design Systems Inc (NASDAQ:CDNS). Alkeon Capital Management has a $102.7 million position in the stock, comprising 2.3% of its 13F portfolio. Sitting at the No. 2 spot is Christopher Lord of Criterion Capital, with a $71.8 million position; 2.9% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Mariko Gordon’s Daruma Asset Management, Jim Simons’s Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Judging by the fact that Cadence Design Systems Inc (NASDAQ:CDNS) has faced dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there is a sect of hedgies that decided to sell off their entire stakes in Q1. It’s worth mentioning that Donald Chiboucis’s Columbus Circle Investors dumped the largest stake of the “upper crust” of funds we watch, comprising about $30.5 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $4.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds in Q1.

How have insiders been trading Cadence Design Systems Inc (NASDAQ:CDNS)?

Insider buying made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the last six-month time period, Cadence Design Systems Inc (NASDAQ:CDNS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators 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). This group of stocks are the members of the application software industry and their market caps resemble CDNS’s market cap.

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