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Is Companhia Brasileira de Distrib. (ADR) (CBD) Going to Burn These Hedge Funds?

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Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) was in 14 hedge funds’ portfolio at the end of March. CBD investors should be aware of an increase in enthusiasm from smart money recently. There were 10 hedge funds in our database with CBD positions at the end of the previous quarter.

Companhia Brasileira de Distrib. (ADR) (NYSE:CBD)

To most market participants, hedge funds are perceived as worthless, old investment tools of the past. While there are greater than 8000 funds with their doors open today, we look at the aristocrats of this club, around 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total capital, and by tracking their best stock picks, we have unearthed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as important, positive insider trading sentiment is a second way to break down the stock market universe. There are a variety of stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).

Consequently, we’re going to take a peek at the key action surrounding Companhia Brasileira de Distrib. (ADR) (NYSE:CBD).

How are hedge funds trading Companhia Brasileira de Distrib. (ADR) (NYSE:CBD)?

At the end of the first quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 40% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably.

According to our comprehensive database, William B. Gray’s Orbis Investment Management had the most valuable position in Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), worth close to $100.3 million, accounting for 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $28.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Dan Loeb’s Third Point, Douglas Dillard Jr. and Raj D. Venkatesan’s Standard Pacific Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

As one would reasonably expect, key hedge funds have jumped into Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) headfirst. Orbis Investment Management, managed by William B. Gray, established the largest position in Companhia Brasileira de Distrib. (ADR) (NYSE:CBD). Orbis Investment Management had 100.3 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also made a $13.3 million investment in the stock during the quarter. The other funds with brand new CBD positions are Mike Vranos’s Ellington, Bruce Kovner’s Caxton Associates LP, and John Overdeck and David Siegel’s Two Sigma Advisors.

What do corporate executives and insiders think about Companhia Brasileira de Distrib. (ADR) (NYSE:CBD)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Companhia Brasileira de Distrib. (ADR) (NYSE:CBD). These stocks are Casey’s General Stores, Inc. (NASDAQ:CASY), Delhaize Group (ADR) (NYSE:DEG), Safeway Inc. (NYSE:SWY), The Kroger Co. (NYSE:KR), and Whole Foods Market, Inc. (NASDAQ:WFM). This group of stocks belong to the grocery stores industry and their market caps are similar to CBD’s market cap.

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