CBIZ, Inc. (CBZ): Are Hedge Funds Right About This Stock?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

CBIZ, Inc. (NYSE:CBZ) was in 15 hedge funds’ portfolios at the end of September. CBZ has seen an increase in hedge fund interest recently. There were 12 hedge funds in our database with CBZ positions at the end of the previous quarter. Our calculations also showed that cbz isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

D. E. Shaw

We’re going to view the key hedge fund action surrounding CBIZ, Inc. (NYSE:CBZ).

Hedge fund activity in CBIZ, Inc. (NYSE:CBZ)

Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CBZ over the last 13 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

No of Hedge Funds with CBZ Positions

The largest stake in CBIZ, Inc. (NYSE:CBZ) was held by Cardinal Capital, which reported holding $68.6 million worth of stock at the end of September. It was followed by P2 Capital Partners with a $63.9 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Private Capital Management.

As aggregate interest increased, some big names have jumped into CBIZ, Inc. (NYSE:CBZ) headfirst. Gotham Asset Management, managed by Joel Greenblatt, created the biggest position in CBIZ, Inc. (NYSE:CBZ). Gotham Asset Management had $0.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $0.5 million position during the quarter. The following funds were also among the new CBZ investors: Mike Vranos’s Ellington and Frederick DiSanto’s Ancora Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CBIZ, Inc. (NYSE:CBZ) but similarly valued. We will take a look at Fitbit Inc (NYSE:FIT), OceanFirst Financial Corp. (NASDAQ:OCFC), Party City Holdco Inc (NYSE:PRTY), and State Auto Financial Corporation (NASDAQ:STFC). This group of stocks’ market values are similar to CBZ’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FIT 17 85762 -3
OCFC 15 91004 2
PRTY 18 118672 1
STFC 3 15345 0
Average 13.25 77696 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $182 million in CBZ’s case. Party City Holdco Inc (NYSE:PRTY) is the most popular stock in this table. On the other hand State Auto Financial Corporation (NASDAQ:STFC) is the least popular one with only 3 bullish hedge fund positions. CBIZ, Inc. (NYSE:CBZ) 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 PRTY might be a better candidate to consider a long position.

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