Is CareFusion Corporation (NYSE:CFN) a cheap investment today? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience
In today’s marketplace, there are plenty of metrics shareholders can use to monitor publicly traded companies. A pair of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can outperform their index-focused peers by a healthy margin (see just how much).
Just as beneficial, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. There are a number of incentives for an insider to drop shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if “monkeys” know where to look (learn more here).
With all of this in mind, let’s take a look at the key action surrounding CareFusion Corporation (NYSE:CFN).
What does the smart money think about CareFusion Corporation (NYSE:CFN)?
At the end of the fourth quarter, a total of 28 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably.
When looking at the hedgies we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in CareFusion Corporation (NYSE:CFN). Arrowstreet Capital has a $143 million billion position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Cadian Capital, managed by Eric Bannasch, which held a $106 million position; 0.7% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Ricky Sandler’s Eminence Capital, Lee Ainslie’s Maverick Capital and David Costen Haley’s HBK Investments.
Judging by the fact that CareFusion Corporation (NYSE:CFN) has faced falling interest from hedge fund managers, logic holds that there is a sect of fund managers that elected to cut their positions entirely in Q4. Intriguingly, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC sold off the biggest position of the “upper crust” of funds we track, valued at an estimated $140 million in stock.. David Gallo’s fund, Valinor Management LLC, also dumped its stock, about $11 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about CareFusion Corporation (NYSE:CFN)?
Insider buying is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time frame, CareFusion Corporation (NYSE:CFN) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned studies, retail investors must always monitor hedge fund and insider trading sentiment, and CareFusion Corporation (NYSE:CFN) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.