If you were to ask many of your peers, hedge funds are viewed as overrated, outdated financial tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey aim at the moguls of this club, around 525 funds. It is assumed that this group oversees the lion’s share of all hedge funds’ total assets, and by tracking their best stock picks, we’ve discovered a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as useful, optimistic insider trading sentiment is a second way to analyze the stock market universe. As the old adage goes: there are a variety of reasons for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).
Now that that’s out of the way, we’re going to study the recent info for Covance Inc. (NYSE:CVD).
What have hedge funds been doing with Covance Inc. (NYSE:CVD)?
At Q2’s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.
Out of the hedge funds we follow, Columbus Circle Investors, managed by Donald Chiboucis, holds the biggest position in Covance Inc. (NYSE:CVD). Columbus Circle Investors has a $28.8 million position in the stock, comprising 0.2% of its 13F portfolio. On Columbus Circle Investors’s heels is Chuck Royce of Royce & Associates, with a $24.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Brian Ashford-Russell and Tim Woolley’s Polar Capital, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
Because Covance Inc. (NYSE:CVD) has faced bearish sentiment from the smart money’s best and brightest, it’s easy to see that there was a specific group of hedgies that slashed their entire stakes heading into Q2. Intriguingly, Israel Englander’s Millennium Management dropped the biggest investment of the “upper crust” of funds we watch, comprising close to $16.6 million in call options., and Israel Englander of Millennium Management was right behind this move, as the fund said goodbye to about $4.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading Covance Inc. (NYSE:CVD)?
Insider buying is best served when the company in focus has seen transactions within the past half-year. Over the latest half-year time frame, Covance Inc. (NYSE:CVD) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Covance Inc. (NYSE:CVD). These stocks are Laboratory Corp. of America Holdings (NYSE:LH), Alere Inc (NYSE:ALR), PAREXEL International Corporation (NASDAQ:PRXL), Mettler-Toledo International Inc. (NYSE:MTD), and PerkinElmer, Inc. (NYSE:PKI). All of these stocks are in the medical laboratories & research industry and their market caps resemble CVD’s market cap.