The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded CGI Inc. (NYSE:GIB) and determine whether the smart money was really smart about this stock.
Is CGI Inc. (NYSE:GIB) a buy right now? The smart money was becoming hopeful. The number of bullish hedge fund bets inched up by 1 in recent months. CGI Inc. (NYSE:GIB) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GIB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 18 hedge funds in our database with GIB holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are plenty of tools stock traders put to use to grade stocks. A pair of the less utilized tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the broader indices by a solid margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s check out the recent hedge fund action regarding CGI Inc. (NYSE:GIB).
What does smart money think about CGI Inc. (NYSE:GIB)?
At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in GIB a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of CGI Inc. (NYSE:GIB), with a stake worth $131.6 million reported as of the end of September. Trailing Arrowstreet Capital was Echo Street Capital Management, which amassed a stake valued at $27.1 million. D E Shaw, Renaissance Technologies, and Galibier 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 Galibier Capital Management allocated the biggest weight to CGI Inc. (NYSE:GIB), around 4.95% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, designating 4.29 percent of its 13F equity portfolio to GIB.
As industrywide interest jumped, key money managers have jumped into CGI Inc. (NYSE:GIB) headfirst. Echo Street Capital Management, managed by Greg Poole, initiated the largest position in CGI Inc. (NYSE:GIB). Echo Street Capital Management had $27.1 million invested in the company at the end of the quarter. Anthony S. Daffer’s Provenire Capital also initiated a $4.6 million position during the quarter. The other funds with new positions in the stock are Parvinder Thiara’s Athanor Capital, Donald Sussman’s Paloma Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks similar to CGI Inc. (NYSE:GIB). We will take a look at Fox Corporation (NASDAQ:FOX), Fox Corporation (NASDAQ:FOXA), Maxim Integrated Products Inc. (NASDAQ:MXIM), Laboratory Corp. of America Holdings (NYSE:LH), Amcor plc (NYSE:AMCR), Pioneer Natural Resources Company (NYSE:PXD), and Bilibili Inc. (NASDAQ:BILI). This group of stocks’ market caps match GIB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $857 million. That figure was $260 million in GIB’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 16 bullish hedge fund positions. CGI Inc. (NYSE:GIB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GIB is 40.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately GIB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GIB investors were disappointed as the stock returned 7.6% in the third 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.
Disclosure: None. This article was originally published at Insider Monkey.