Is Cadence Design Systems Inc (CDNS) A Good Stock To Buy?

Seeing as Cadence Design Systems Inc (NASDAQ:CDNS) has faced a decline in interest from the smart money, we can see that there lies a certain “tier” of fund managers that slashed their full holdings by the end of the third quarter. At the top of the heap, Jeffrey Tannenbaum’s Fir Tree cut the largest position of all the hedgies tracked by Insider Monkey, comprising about $21.3 million in stock, and Ernest Chow and Jonathan Howe’s Sensato Capital Management was right behind this move, as the fund dropped about $4.4 million worth of CDNS shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cadence Design Systems Inc (NASDAQ:CDNS) but similarly valued. We will take a look at New York Community Bancorp, Inc. (NYSE:NYCB), Icahn Enterprises LP (NASDAQ:IEP), W.P. Carey Inc. REIT (NYSE:WPC), and Seagate Technology PLC (NASDAQ:STX). This group of stocks’ market values are similar to CDNS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NYCB 15 200787 0
IEP 4 6591251 -2
WPC 16 133759 5
STX 33 1215628 10

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $2.04 billion. That figure was just $612 million in CDNS’s case. Seagate Technology PLC (NASDAQ:STX) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Cadence Design Systems Inc (NASDAQ:CDNS) 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 STX might be a better candidate to consider a long position.

Disclosure: none.