Hedge Funds Are Gaining Confidence in Cavium Inc (CAVM)

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Cavium Inc (NASDAQ:CAVM) the right investment to pursue these days? The smart money is becoming more confident. The number of long hedge fund positions increased by 4 lately. At the end of this article we will also compare CAVM to other stocks including Washington Federal Inc. (NASDAQ:WAFD), Pampa Energia S.A. (ADR) (NYSE:PAM), and FS Investment Corporation (NYSE:FSIC) to get a better sense of its popularity.

Follow Cavium Inc. (NASDAQ:CAVM)

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

semiconductor, intel, microchip, cpu, processor, people, chip, circuit, microprocessor, person, board, closeup, micro, workwear, protective, megabytes, capacitor,

Dragon Images/Shutterstock.com

Hedge fund activity in Cavium Inc (NASDAQ:CAVM)

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a 20% rise from the second quarter of 2016 and the second straight quarter with a notable increase in hedge fund ownership. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).


According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Cavium Inc (NASDAQ:CAVM). Citadel Investment Group has a $69.7 million position in the stock. The second most bullish fund manager is Shellback Capital, led by Doug Gordon, Jon Hilsabeck and Don Jabro, holding a $53 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Vivek Mehta and Aaron Husock’s ShearLink Capital, Thomas E. Claugus’ GMT Capital and Jason Karp’s Tourbillon Capital Partners.

As aggregate interest increased, specific money managers have been driving this bullishness. Shellback Capital created the most valuable position in Cavium Inc (NASDAQ:CAVM). Tourbillon Capital Partners also initiated a $33.9 million position during the quarter. The following funds were also among the new CAVM investors: Michael A. Price and Amos Meron’s Empyrean Capital Partners, James Dondero’s Highland Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks similar to Cavium Inc (NASDAQ:CAVM). We will take a look at Washington Federal Inc. (NASDAQ:WAFD), Pampa Energia S.A. (ADR) (NYSE:PAM), FS Investment Corporation (NYSE:FSIC), and Paylocity Holding Corp (NASDAQ:PCTY). This group of stocks’ market values match CAVM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WAFD 13 32873 1
PAM 17 284757 -1
FSIC 3 5370 0
PCTY 13 72004 4

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $347 million in CAVM’s case. Pampa Energia S.A. (ADR) (NYSE:PAM) is the most popular stock in this table. On the other hand FS Investment Corporation (NYSE:FSIC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Cavium Inc (NASDAQ:CAVM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and that it’s growing more popular among them, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None