Chicago Bridge & Iron Company N.V. (NYSE:CBI): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is Chicago Bridge & Iron Company N.V. (NYSE:CBI) a buy right now? Hedge funds are getting less bullish. The number of long hedge fund positions shrunk by 4 in recent months.

Chicago Bridge & Iron Company N.V. (NYSE:CBI)

According to most market participants, hedge funds are viewed as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, we choose to focus on the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by paying attention to their highest performing equity investments, we have come up with a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Just as key, positive insider trading sentiment is a second way to break down the world of equities. Obviously, there are lots of incentives for an executive to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).

Consequently, let’s take a gander at the key action surrounding Chicago Bridge & Iron Company N.V. (NYSE:CBI).

What does the smart money think about Chicago Bridge & Iron Company N.V. (NYSE:CBI)?

In preparation for this year, a total of 32 of the hedge funds we track held long positions in this stock, a change of -11% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, Robert Pitts’s Steadfast Capital Management had the most valuable position in Chicago Bridge & Iron Company N.V. (NYSE:CBI), worth close to $242 million billion, comprising 6.5% of its total 13F portfolio. Coming in second is Balyasny Asset Management, managed by Dmitry Balyasny, which held a $164 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Steven Cohen’s SAC Capital Advisors, Ken Griffin’s Citadel Investment Group and Martin D. Sass’s MD Sass.

Since Chicago Bridge & Iron Company N.V. (NYSE:CBI) has faced declining sentiment from the smart money, we can see that there were a few fund managers that elected to cut their positions entirely at the end of the year. Intriguingly, Howard Guberman’s Gruss Asset Management cut the biggest investment of the 450+ funds we watch, valued at about $27 million in stock., and Jim Chanos of Kynikos was right behind this move, as the fund dumped about $10 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds at the end of the year.

What do corporate executives and insiders think about Chicago Bridge & Iron Company N.V. (NYSE:CBI)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time period, Chicago Bridge & Iron Company N.V. (NYSE:CBI) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s studies, everyday investors must always watch hedge fund and insider trading activity, and Chicago Bridge & Iron Company N.V. (NYSE:CBI) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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