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Hedge Funds Are Dumping Casa Systems, Inc. (CASA)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Casa Systems, Inc. (NASDAQ:CASA).

Is Casa Systems, Inc. (NASDAQ:CASA) worth your attention right now? Prominent investors are taking a bearish view. The number of long hedge fund positions shrunk by 2 recently. Our calculations also showed that CASA isn’t among the 30 most popular stocks among hedge funds. CASA was in 10 hedge funds’ portfolios at the end of the third quarter of 2018. There were 12 hedge funds in our database with CASA holdings at the end of the previous quarter.

In the eyes of most market participants, hedge funds are seen as slow, outdated financial tools of years past. While there are over 8,000 funds trading at present, Our researchers choose to focus on the masters of this club, approximately 700 funds. Most estimates calculate that this group of people control the lion’s share of the smart money’s total asset base, and by paying attention to their matchless picks, Insider Monkey has spotted numerous investment strategies that have historically outstripped the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

GOTHAM ASSET MANAGEMENT

Let’s take a gander at the latest hedge fund action encompassing Casa Systems, Inc. (NASDAQ:CASA).

What does the smart money think about Casa Systems, Inc. (NASDAQ:CASA)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CASA over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CASA_dec2018

Among these funds, Point72 Asset Management held the most valuable stake in Casa Systems, Inc. (NASDAQ:CASA), which was worth $14.3 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $6.5 million worth of shares. Moreover, Gotham Asset Management, GLG Partners, and HBK Investments were also bullish on Casa Systems, Inc. (NASDAQ:CASA), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Casa Systems, Inc. (NASDAQ:CASA) has experienced bearish sentiment from the smart money, it’s safe to say that there exists a select few hedgies that slashed their positions entirely heading into Q3. Interestingly, Israel Englander’s Millennium Management sold off the biggest position of all the hedgies tracked by Insider Monkey, worth about $8.3 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $5 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Casa Systems, Inc. (NASDAQ:CASA) but similarly valued. These stocks are ePlus Inc. (NASDAQ:PLUS), United Fire Group, Inc. (NASDAQ:UFCS), BMC Stock Holdings, Inc. (NASDAQ:BMCH), and Endurance International Group Holdings Inc (NASDAQ:EIGI). This group of stocks’ market values match CASA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLUS 10 29996 1
UFCS 8 21268 -2
BMCH 25 169124 2
EIGI 15 144114 0
Average 14.5 91126 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $30 million in CASA’s case. BMC Stock Holdings, Inc. (NASDAQ:BMCH) is the most popular stock in this table. On the other hand United Fire Group, Inc. (NASDAQ:UFCS) is the least popular one with only 8 bullish hedge fund positions. Casa Systems, Inc. (NASDAQ:CASA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BMCH might be a better candidate to consider a long position.

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

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