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Hedge Funds Aren’t Crazy About Cardinal Financial Corporation (CFNL) Anymore

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Is Cardinal Financial Corporation (NASDAQ:CFNL) undervalued? The smart money is becoming less hopeful. The number of bullish hedge fund bets dropped by 2 in recent months.

To most shareholders, hedge funds are perceived as worthless, old investment vehicles of years past. While there are over 8000 funds with their doors open today, we at Insider Monkey hone in on the aristocrats of this club, close to 450 funds. It is estimated that this group controls the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their highest performing picks, we have found a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, positive insider trading activity is a second way to break down the financial markets. Obviously, there are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).

Now, it’s important to take a gander at the recent action regarding Cardinal Financial Corporation (NASDAQ:CFNL).

What have hedge funds been doing with Cardinal Financial Corporation (NASDAQ:CFNL)?

At Q1’s end, a total of 6 of the hedge funds we track held long positions in this stock, a change of -25% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially.

Cardinal Financial Corporation (NASDAQ:CFNL)When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the most valuable position in Cardinal Financial Corporation (NASDAQ:CFNL), worth close to $5.8 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $1.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Seeing as Cardinal Financial Corporation (NASDAQ:CFNL) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of fund managers that decided to sell off their positions entirely last quarter. Intriguingly, Ken Gray and Steve Walsh’s Bryn Mawr Capital dumped the largest stake of the 450+ funds we monitor, comprising about $2.7 million in stock., and Charles Davidson of Wexford Capital was right behind this move, as the fund sold off about $2.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.

What have insiders been doing with Cardinal Financial Corporation (NASDAQ:CFNL)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, Cardinal Financial Corporation (NASDAQ:CFNL) has seen 4 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Cardinal Financial Corporation (NASDAQ:CFNL). These stocks are Pinnacle Financial Partners (NASDAQ:PNFP), Simmons First National Corporation (NASDAQ:SFNC), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), Community Trust Bancorp, Inc. (NASDAQ:CTBI), and Renasant Corp. (NASDAQ:RNST). All of these stocks are in the regional – southeast banks industry and their market caps are closest to CFNL’s market cap.

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