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Is CAE, Inc. (USA) (CAE) A Good Stock To Buy Right Now?

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Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

CAE, Inc. (USA) (NYSE:CAE) was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. This number points to an increase in hedge fund sentiment in recent months. There were 11 hedge funds in our database with CAE holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Allied World Assurance Co Holdings, AG. (NYSE:AWH), Prosperity Bancshares, Inc. (NYSE:PB), and CyrusOne Inc (NASDAQ:CONE) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

InsectWorld / Shutterstock.com

InsectWorld / Shutterstock.com

Now, let’s review the recent action encompassing CAE, Inc. (USA) (NYSE:CAE).

What does the smart money think about CAE, Inc. (USA) (NYSE:CAE)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in CAE at the beginning of this year. the table below shows the continuous increase in hedge fund sentiment over the last 5 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

HedgeFundSentimentChart

Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in CAE, Inc. (USA) (NYSE:CAE). Renaissance Technologies has a $8.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is AQR Capital Management, quant hedge fund led by Cliff Asness, holding a $5.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of John Overdeck and David Siegel’s quant hedge fund Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Andre F. Perold’s HighVista Strategies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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