The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Computer Sciences Corporation (NYSE:CSC) and see how it was affected.
Is Computer Sciences Corporation (NYSE:CSC) a healthy stock for your portfolio? The smart money is taking a bullish view. The number of bullish hedge fund bets increased by 6 in recent months. Computer Sciences Corporation (NYSE:CSC) was in 34 hedge funds’ portfolios at the end of the third quarter of 2015. There were 28 hedge funds in our database with Computer Sciences Corporation (NYSE:CSC) holdings at the end of the previous quarter. At the end of this article, we will also compare Computer Sciences Corporation (NYSE:CSC) to other stocks, including Icahn Enterprises LP (NASDAQ:IEP), Credicorp Ltd. (USA) (NYSE:BAP), and Wyndham Worldwide Corporation (NYSE:WYN) to get a better sense of its popularity.
Follow Computer Sciences Corp (NYSE:CSC)
Follow Computer Sciences Corp (NYSE:CSC)
To most market participants, hedge funds are perceived as underperforming, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, our researchers choose to focus on the masters of this club, about 700 funds. Most estimates calculate that this group of people watch over bulk of all hedge funds’ total capital, and by monitoring their first-class equity investments, Insider Monkey has identified various investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s take a gander at the key action regarding Computer Sciences Corporation (NYSE:CSC).
How are hedge funds trading Computer Sciences Corporation (NYSE:CSC)?
At the end of Q3, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 21% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, JANA Partners, managed by Barry Rosenstein, holds the largest position in Computer Sciences Corporation (NYSE:CSC). JANA Partners has a $450.1 million position in the stock, comprising 5.1% of its 13F portfolio. On JANA Partners’ heels is Cliff Asness of AQR Capital Management, with a $104.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Clifton S. Robbins’ Blue Harbour Group, Joel Greenblatt’s Gotham Asset Management, and D E Shaw.
Consequently, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Computer Sciences Corporation (NYSE:CSC). Marshall Wace LLP had $30.5 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $15.4 million investment in the stock during the quarter. The other funds with brand new CSC positions are Neil Chriss’ Hutchin Hill Capital, Howard Shainker and Akiva Katz’s Bow Street LLC, and Visium Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Computer Sciences Corporation (NYSE:CSC) but similarly valued. These stocks are Icahn Enterprises LP (NASDAQ:IEP), Credicorp Ltd. (USA) (NYSE:BAP), Wyndham Worldwide Corporation (NYSE:WYN), and PVH Corp (NYSE:PVH). This group of stocks’ market valuations matches Computer Sciences Corporation (NYSE:CSC)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IEP | 6 | 7933759 | 0 |
| BAP | 18 | 389335 | -4 |
| WYN | 29 | 1045532 | 1 |
| PVH | 37 | 1246881 | 1 |
As you can see, these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $2.65 billion. That figure was $1.24 billion in Computer Sciences Corporation (NYSE:CSC)’s case. PVH Corp (NYSE:PVH) is the most popular stock in this table. On the other hand, Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 6 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, PVH Corp (NYSE:PVH) might be a better candidate to consider a long position.
