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Covance Inc. (CVD): Insiders Are Dumping, Should You?

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Is Covance Inc. (NYSE:CVD) the right pick for your portfolio? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund bets decreased by 1 in recent months.

In the 21st century investor’s toolkit, there are many metrics investors can use to watch Mr. Market. A pair of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce their index-focused peers by a very impressive amount (see just how much).

Equally as key, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are many incentives for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).

Now, we’re going to take a look at the latest action regarding Covance Inc. (NYSE:CVD).

What have hedge funds been doing with Covance Inc. (NYSE:CVD)?

In preparation for this year, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Columbus Circle Investors, managed by Donald Chiboucis, holds the most valuable position in Covance Inc. (NYSE:CVD). Columbus Circle Investors has a $20.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $19.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Andrew Sandler’s Sandler Capital Management, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.

Since Covance Inc. (NYSE:CVD) has experienced a declination in interest from the smart money, it’s safe to say that there were a few hedge funds that slashed their full holdings last quarter. At the top of the heap, Malcolm Fairbairn’sMILLENNIUM MANAGEMENTAscend Capital sold off the biggest investment of all the hedgies we monitor, totaling close to $13.1 million in stock.. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $9.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds last quarter.

How are insiders trading Covance Inc. (NYSE:CVD)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past half-year. Over the last six-month time period, Covance Inc. (NYSE:CVD) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Covance Inc. (NYSE:CVD). These stocks are Laboratory Corp. of America Holdings (NYSE:LH), Alere Inc (NYSE:ALR), PAREXEL International Corporation (NASDAQ:PRXL), Mettler-Toledo International Inc. (NYSE:MTD), and PerkinElmer, Inc. (NYSE:PKI). This group of stocks are the members of the medical laboratories & research industry and their market caps are closest to CVD’s market cap.

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