Should You Avoid Corrections Corp Of America (CXW)?

Page 1 of 2

Is Corrections Corp Of America (NYSE:CXW) a buy?

In the eyes of many of your peers, hedge funds are assumed to be overrated, outdated financial tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey focuses on the crème de la crème of this club, around 525 funds. It is assumed that this group controls the majority of the smart money’s total assets, and by monitoring their highest performing equity investments, we’ve discovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as useful, positive insider trading sentiment is another way to look at the marketplace. Obviously, there are lots of motivations for an executive to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).

Corrections Corp Of America

Keeping this in mind, it’s important to study the latest info surrounding Corrections Corp Of America (NYSE:CXW).

What does the smart money think about Corrections Corp Of America (NYSE:CXW)?

Heading into Q3, a total of 19 of the hedge funds we track were bullish in this stock, a change of -27% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.

According to our 13F database, Jim Simons’s Renaissance Technologies had the biggest position in Corrections Corp Of America (NYSE:CXW), worth close to $37.6 million, comprising 0.1% of its total 13F portfolio. Coming in second is Highland Capital Management, managed by James Dondero, which held a $25.8 million position; 2% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Ric Dillon’s Diamond Hill Capital, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

Since Corrections Corp Of America (NYSE:CXW) has experienced dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there was a specific group of money managers who were dropping their positions entirely in Q1. Intriguingly, Neil Chriss’s Hutchin Hill Capital dumped the biggest position of all the hedgies we monitor, comprising close to $19.1 million in stock, and Eric Mindich of Eton Park Capital was right behind this move, as the fund dropped about $10.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 7 funds in Q1.

How have insiders been trading Corrections Corp Of America (NYSE:CXW)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, Corrections Corp Of America (NYSE:CXW) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Corrections Corp Of America (NYSE:CXW). These stocks are FTI Consulting, Inc. (NYSE:FCN), Booz Allen Hamilton Holding Corporation (NYSE:BAH), The Corporate Executive Board Company (NYSE:CEB), Towers Watson & Co (NYSE:TW), and Genpact Limited (NYSE:G). This group of stocks are in the management services industry and their market caps are closest to CXW’s market cap.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!