We at Insider Monkey have gone over 742 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 funds think of Cadence Design Systems Inc (NASDAQ:CDNS) based on that data.
Cadence Design Systems Inc (NASDAQ:CDNS) investors should be aware of a decrease in support from the world’s most elite money managers lately. CDNS was in 26 hedge funds’ portfolios at the end of the third quarter of 2016. There were 29 hedge funds in our database with CDNS holdings at the end of the previous quarter. At the end of this article we will also compare CDNS to other stocks including New York Community Bancorp, Inc. (NYSE:NYCB), Icahn Enterprises LP (NASDAQ:IEP), and W.P. Carey Inc. REIT (NYSE:WPC) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a gander at the new action regarding Cadence Design Systems Inc (NASDAQ:CDNS).
What does the smart money think about Cadence Design Systems Inc (NASDAQ:CDNS)?
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 10% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David S. Winter and David J. Millstone’s 40 North Management has the biggest position in Cadence Design Systems Inc (NASDAQ:CDNS), worth close to $223.7 million, comprising 40.8% of its total 13F portfolio. The second most bullish fund manager is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $149.8 million position; 2.8% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Mariko Gordon’s Daruma Asset Management, Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
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|
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.