We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of CDI Corp. (NYSE:CDI).
Is CDI Corp. (NYSE:CDI) the right investment to pursue these days? The best stock pickers are taking a bearish view. The number of long hedge fund bets was cut by 1 recently. At the end of this article we will also compare CDI to other stocks, including Points International Ltd (USA) (NASDAQ:PCOM), Synergetics USA Inc (NASDAQ:SURG), and IMPAC Mortgage Holdings, Inc (NYSEAMEX:IMH) to get a better sense of its popularity.
If you’d ask most shareholders, hedge funds are assumed to be slow, outdated financial tools of yesteryear. While there are greater than an 8000 funds trading at present, Our experts choose to focus on the masters of this club, approximately 700 funds. These investment experts handle the lion’s share of the hedge fund industry’s total capital, and by tracking their highest performing stock picks, Insider Monkey has determined various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s take a look at the new action regarding CDI Corp. (NYSE:CDI).
How have hedgies been trading CDI Corp. (NYSE:CDI)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, David Brown’s Hawk Ridge Management has the number one position in CDI Corp. (NYSE:CDI), worth close to $3.3 million, amounting to 2.5% of its total 13F portfolio. On Hawk Ridge Management’s heels is Jim Simons’ Renaissance Technologies, with a $1.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw, and John Overdeck and David Siegel’s Two Sigma Advisors.
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.