Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Cadence Design Systems Inc (NASDAQ:CDNS).
Cadence Design Systems Inc (NASDAQ:CDNS) investors should pay attention to a decrease in hedge fund interest recently. At the end of this article we will also compare CDNS to other stocks including The Middleby Corporation (NASDAQ:MIDD), UGI Corp (NYSE:UGI), and Reinsurance Group of America Inc (NYSE:RGA) to get a better sense of its popularity.
Follow Cadence Design Systems Inc (NASDAQ:CDNS)
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Today there are many gauges stock traders put to use to value their holdings. A duo of the most underrated gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a solid amount (see the details here).
With all of this in mind, we’re going to take a peek at the new action surrounding Cadence Design Systems Inc (NASDAQ:CDNS).
How are hedge funds trading Cadence Design Systems Inc (NASDAQ:CDNS)?
At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Glenview Capital, managed by Larry Robbins, holds the largest position in Cadence Design Systems Inc (NASDAQ:CDNS). Glenview Capital has a $475.9 million position in the stock, comprising 2.4% of its 13F portfolio. The second most bullish fund manager is Jeffrey Tannenbaum of Fir Tree, with a $256.3 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions consist of David S. Winter and David J. Millstone’s 40 North Management, Panayotis Takis Sparaggis’ Alkeon Capital Management and Matthew Sidman’s Three Bays Capital.
Because Cadence Design Systems Inc (NASDAQ:CDNS) has witnessed a declination in interest from hedge fund managers, we can see that there is a sect of hedge funds that decided to sell off their positions entirely heading into Q4. At the top of the heap, Christopher Lord’s Criterion Capital cut the biggest investment of all the hedgies watched by Insider Monkey, worth an estimated $76.1 million in stock. David Gallo’s fund, Valinor Management LLC, also said goodbye to its stock, about $37.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Cadence Design Systems Inc (NASDAQ:CDNS). These stocks are The Middleby Corporation (NASDAQ:MIDD), UGI Corp (NYSE:UGI), Reinsurance Group of America Inc (NYSE:RGA), and Qiagen NV (NASDAQ:QGEN). This group of stocks’ market valuations are similar to CDNS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MIDD | 20 | 566957 | -3 |
| UGI | 16 | 348448 | -2 |
| RGA | 16 | 302110 | -2 |
| QGEN | 14 | 106937 | -6 |
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $1484 million in CDNS’s case. The Middleby Corporation (NASDAQ:MIDD) is the most popular stock in this table. On the other hand Qiagen NV (NASDAQ:QGEN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cadence Design Systems Inc (NASDAQ:CDNS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
