Hedge Funds Aren’t Crazy About CACI International Inc (CACI) Anymore

In this article we will analyze whether CACI International Inc (NYSE:CACI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

CACI International Inc (NYSE:CACI) has seen a decrease in support from the world’s most elite money managers of late. CACI International Inc (NYSE:CACI) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that CACI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to check out the key hedge fund action encompassing CACI International Inc (NYSE:CACI).

Do Hedge Funds Think CACI Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in CACI a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is CACI A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of CACI International Inc (NYSE:CACI), with a stake worth $120.7 million reported as of the end of March. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $100.2 million. Horizon Asset Management, D E Shaw, and AQR 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 Akaris Global Partners allocated the biggest weight to CACI International Inc (NYSE:CACI), around 10.93% of its 13F portfolio. Engine Capital is also relatively very bullish on the stock, dishing out 7.17 percent of its 13F equity portfolio to CACI.

Judging by the fact that CACI International Inc (NYSE:CACI) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their full holdings in the first quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest position of all the hedgies tracked by Insider Monkey, totaling an estimated $7.5 million in stock, and Vikas Lunia’s Lunia Capital was right behind this move, as the fund said goodbye to about $6.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 7 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CACI International Inc (NYSE:CACI) but similarly valued. These stocks are BOK Financial Corporation (NASDAQ:BOKF), Ovintiv Inc. (NYSE:OVV), Coherent, Inc. (NASDAQ:COHR), Stericycle Inc (NASDAQ:SRCL), The Timken Company (NYSE:TKR), nCino, Inc. (NASDAQ:NCNO), and BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ). This group of stocks’ market caps are similar to CACI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BOKF 17 454944 -9
OVV 30 533700 4
COHR 41 1454406 19
SRCL 24 648956 -1
TKR 23 225807 -11
NCNO 21 342756 -7
BJ 14 135957 -11
Average 24.3 542361 -2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $542 million. That figure was $632 million in CACI’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is the least popular one with only 14 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. Our overall hedge fund sentiment score for CACI is 29.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CACI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CACI investors were disappointed as the stock returned 7.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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