Should You Buy The Corporate Executive Board Company (CEB)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like The Corporate Executive Board Company (NYSE:CEB).

The Corporate Executive Board Company (NYSE:CEB) has experienced an increase in activity from the world’s largest hedge funds recently. CEB was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. There were 11 hedge funds in our database with CEB positions 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 Imperva Inc (NYSE:IMPV), Stag Industrial Inc (NYSE:STAG), and Impax Laboratories Inc (NASDAQ:IPXL) to gather more data points.

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.

What does the smart money think about The Corporate Executive Board Company (NYSE:CEB)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 9% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in CEB at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John W. Rogers’s Ariel Investments has the largest position in The Corporate Executive Board Company (NYSE:CEB), worth close to $23.7 million. Coming in second is Royce & Associates, led by Chuck Royce, which holds a $11 million position. Remaining peers with similar optimism encompass Amy Minella’s Cardinal Capital, Seth Rosen’s Nitorum Capital and Ken Griffin’s Citadel Investment Group. We should note that Nitorum Capital is 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.

As one would reasonably expect, key money managers have jumped into The Corporate Executive Board Company (NYSE:CEB) headfirst. D E Shaw, one of the biggest hedge funds in the world, created the biggest position in The Corporate Executive Board Company (NYSE:CEB). D E Shaw had $2.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.7 million investment in the stock during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Corporate Executive Board Company (NYSE:CEB) but similarly valued. These stocks are Imperva Inc (NYSE:IMPV), Stag Industrial Inc (NYSE:STAG), Impax Laboratories Inc (NASDAQ:IPXL), and Brady Corp (NYSE:BRC). This group of stocks’ market valuations match CEB’s market valuation.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $66 million in CEB’s case. Imperva Inc (NYSE:IMPV) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 6 bullish hedge fund positions. The Corporate Executive Board Company (NYSE:CEB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IMPV might be a better candidate to consider taking a long position in.

Disclosure: None