We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified CDI as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CDI Corp. (NYSE:CDI) but similarly valued. These stocks are Points International Ltd (USA) (NASDAQ:PCOM), Synergetics USA Inc (NASDAQ:SURG), IMPAC Mortgage Holdings, Inc (NYSEAMEX:IMH), and KCAP Financial Inc (NASDAQ:KCAP). This group of stocks’ market valuations are closest to CDI’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of an 8 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $7 million in CDI’s case. Synergetics USA Inc (NASDAQ:SURG) is the most popular stock in this table. On the other hand, IMPAC Mortgage Holdings, Inc (NYSEAMEX:IMH) is the least popular one with only 5 bullish hedge fund positions. CDI Corp. (NYSE:CDI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SURG might be a better candidate to consider a long position.