CAE, Inc. (CAE): Hedge Fund Sentiment Unchanged But Still Negative

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the nearly unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Hedge fund interest in CAE, Inc. (NYSE:CAE) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CAE to other stocks including AMERCO (NASDAQ:UHAL), Amarin Corporation plc (NASDAQ:AMRN), and HubSpot Inc (NYSE:HUBS) to get a better sense of its popularity. Our calculations also showed that CAE isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are assumed to be slow, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the aristocrats of this group, around 750 funds. These hedge fund managers orchestrate most of the hedge fund industry’s total asset base, and by keeping an eye on their first-class stock picks, Insider Monkey has discovered many investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the fresh hedge fund action encompassing CAE, Inc. (NYSE:CAE).

Hedge fund activity in CAE, Inc. (NYSE:CAE)

At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CAE over the last 16 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Andrew Sandler

Among these funds, Arrowstreet Capital held the most valuable stake in CAE, Inc. (NYSE:CAE), which was worth $61.7 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $52.7 million worth of shares. Moreover, Sandler Capital Management, D E Shaw, and Two Sigma Advisors were also bullish on CAE, Inc. (NYSE:CAE), allocating a large percentage of their portfolios to this stock.

Seeing as CAE, Inc. (NYSE:CAE) has witnessed a decline in interest from the smart money, we can see that there was a specific group of hedge funds that decided to sell off their entire stakes last quarter. Interestingly, Cliff Asness’s AQR Capital Management said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, comprising close to $8.2 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $1.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CAE, Inc. (NYSE:CAE) but similarly valued. These stocks are AMERCO (NASDAQ:UHAL), Amarin Corporation plc (NASDAQ:AMRN), HubSpot Inc (NYSE:HUBS), and AngloGold Ashanti Limited (NYSE:AU). All of these stocks’ market caps are similar to CAE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UHAL 15 400823 3
AMRN 33 1835664 7
HUBS 33 692636 4
AU 16 479675 -7
Average 24.25 852200 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $169 million in CAE’s case. Amarin Corporation plc (NASDAQ:AMRN) is the most popular stock in this table. On the other hand AMERCO (NASDAQ:UHAL) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks CAE, Inc. (NYSE:CAE) is even less popular than UHAL. Hedge funds dodged a bullet by taking a bearish stance towards CAE. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CAE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CAE investors were disappointed as the stock returned -5.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.