Computer Sciences Corporation (NYSE:CSC) continues to gain ground today after Hewlett Packard Enterprise announced on Tuesday that it would sell its struggling IT services business to the Virginia based technology company in an all-stock deal worth approximately $9 billion. Shareholders of Computer Sciences Corporation and HP Enterprise will each own half of the new company’s shares. Computer Sciences Corporation spun off its growing government-focused business last year into a new company CSRA that merged with SRA International Inc. CEO of Computer Sciences Corporation, Mike Lawrie, will hold the same role in the new company, whereas HP Enterprise’s CEO, Meg Whitman, will join the board of the new company.
Looking at the data from the latest round of 13F filings, we don’t see a lot of enthusiasm. Overall, Computer Sciences Corporation (NYSE:CSC) was in 25 hedge funds’ portfolios at the end of the first quarter of 2016, compared to 31 hedge funds in our database with CSC holdings at the end of the previous quarter.
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To most market participants, hedge funds are seen as worthless, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the bigwigs of this club, about 700 funds. It is estimated that this group of investors watch over most of the hedge fund industry’s total asset base, and by keeping an eye on their first-class stock picks, Insider Monkey has formulated many investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Of the funds tracked by Insider Monkey, Larry Robbins’s Glenview Capital has the number one position in Computer Sciences Corporation (NYSE:CSC), worth close to $236.6 million, comprising 1.7% of its total 13F portfolio. On Glenview Capital’s heels is Barry Rosenstein of JANA Partners, with a $158.9 million position; the fund has 3% of its 13F portfolio invested in the stock. Other peers that are bullish contain Cliff Asness’s AQR Capital Management, Joel Greenblatt’s Gotham Asset Management and David Harding’s Winton Capital Management.
Let’s also see which funds sold their entire stakes in Computer Sciences Corporation during the first quarter. Moreover, at the end of this article we will also compare CSC to other stocks, including Sally Beauty Holdings, Inc. (NYSE:SBH), B/E Aerospace Inc (NASDAQ:BEAV), and Tyler Technologies, Inc. (NYSE:TYL) to get a better sense of its popularity.
Judging by the fact that Computer Sciences Corporation (NYSE:CSC) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedge funds who were dropping their full holdings in the fourth quarter. At the top of the heap, Nick Niell’s Arrowgrass Capital Partners dropped the largest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $19.9 million in stock, and Howard Shainker and Akiva Katz’s Bow Street LLC was right behind this move, as the fund dropped about $12.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by six funds in the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Computer Sciences Corporation (NYSE:CSC) but similarly valued. We will take a look at Sally Beauty Holdings, Inc. (NYSE:SBH), B/E Aerospace Inc (NASDAQ:BEAV), Tyler Technologies, Inc. (NYSE:TYL), and AMC Networks Inc (NASDAQ:AMCX). This group of stocks’ market valuations are similar to CSC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBH | 22 | 327214 | -1 |
| BEAV | 36 | 1065955 | -8 |
| TYL | 15 | 113474 | -1 |
| AMCX | 26 | 355015 | 0 |
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $465 million. That figure was $677 million in CSC’s case. B/E Aerospace Inc (NASDAQ:BEAV) is the most popular stock in this table. On the other hand, Tyler Technologies, Inc. (NYSE:TYL) is the least popular one with only 15 bullish hedge fund positions. Computer Sciences Corporation (NYSE:CSC) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BEAV might be a better candidate to consider a long position.
Disclosure: None
