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Hedge Funds Are Nibbling On CACI International Inc (CACI)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of CACI International Inc (NYSE:CACI).

CACI International Inc (NYSE:CACI) has seen an increase in support from the world’s most elite money managers in recent months. CACI was in 25 hedge funds’ portfolios at the end of the first quarter of 2020. There were 24 hedge funds in our database with CACI positions at the end of the previous quarter. Our calculations also showed that CACI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are more than 8000 funds with their doors open today, We choose to focus on the crème de la crème of this club, about 850 funds. Most estimates calculate that this group of people administer bulk of all hedge funds’ total capital, and by tailing their top picks, Insider Monkey has unearthed numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the key hedge fund action surrounding CACI International Inc (NYSE:CACI).

How are hedge funds trading CACI International Inc (NYSE:CACI)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in CACI a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is CACI A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in CACI International Inc (NYSE:CACI), which was worth $91.9 million at the end of the third quarter. On the second spot was Horizon Asset Management which amassed $88.4 million worth of shares. Citadel Investment Group, GLG Partners, and SG Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to CACI International Inc (NYSE:CACI), around 7.07% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 3.91 percent of its 13F equity portfolio to CACI.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Brant Point Investment Management, managed by Ira Unschuld, initiated the largest position in CACI International Inc (NYSE:CACI). Brant Point Investment Management had $8.9 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also made a $8.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Coe’s Intrinsic Edge Capital, Vikas Lunia’s Lunia Capital, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s go over hedge fund activity in other stocks similar to CACI International Inc (NYSE:CACI). We will take a look at News Corp (NASDAQ:NWSA), PRA Health Sciences Inc (NASDAQ:PRAH), Reinsurance Group of America Inc (NYSE:RGA), and Vereit Inc (NYSE:VER). This group of stocks’ market valuations match CACI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWSA 28 296954 2
PRAH 29 189694 -9
RGA 30 275843 3
VER 18 314967 -10
Average 26.25 269365 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $322 million in CACI’s case. Reinsurance Group of America Inc (NYSE:RGA) is the most popular stock in this table. On the other hand Vereit Inc (NYSE:VER) is the least popular one with only 18 bullish hedge fund positions. CACI International Inc (NYSE:CACI) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately CACI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CACI investors were disappointed as the stock returned 19.9% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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