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Is Capella Education Company (CPLA) A Good Stock To Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Capella Education Company (NASDAQ:CPLA) in this article.

Is Capella Education Company (NASDAQ:CPLA) a buy here? Investors who are in the know are in a bearish mood. The number of bullish hedge fund positions shrunk by 2 lately. At the end of this article, we will also compare Capella Education Company (NASDAQ:CPLA) to other stocks including Aegion Corp – Class A (NASDAQ:AEGN), PGT, Inc. (NASDAQ:PGTI), and Synergy Pharmaceuticals Inc (NASDAQ:SGYP) to get a better sense of its popularity.

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In the 21st century investor’s toolkit, there are several formulas market participants use to appraise publicly traded companies. A duo of the most innovative formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a superb amount (see the details here).

Keeping this in mind, we’re going to review the key action regarding Capella Education Company (NASDAQ:CPLA).

Hedge fund activity in Capella Education Company (NASDAQ:CPLA)

Heading into Q4, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 13% from the second quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Capella Education Company (NASDAQ:CPLA), worth close to $48 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Thomas Bancroft of Makaira Partners, with a $29.5 million position; 4.8% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Chuck Royce’s Royce & Associates, Joel Greenblatt’s Gotham Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that Capella Education Company (NASDAQ:CPLA) has witnessed a declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds who sold off their positions entirely last quarter. Interestingly, Paul Tudor Jones’s Tudor Investment Corp sold off the biggest investment of the 700 funds monitored by Insider Monkey, valued at about $0.7 million in stock. George Hall’s fund, Clinton Group, also dumped its stock, about $0.3 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Capella Education Company (NASDAQ:CPLA) but similarly valued. These stocks are Aegion Corp – Class A (NASDAQ:AEGN), PGT, Inc. (NASDAQ:PGTI), Synergy Pharmaceuticals Inc (NASDAQ:SGYP), and Veritiv Corp (NYSE:VRTV). This group of stocks’ market caps matches Capella Education Company (NASDAQ:CPLA)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AEGN 15 38415 2
PGTI 11 82952 -7
SGYP 31 134639 0
VRTV 9 122125 -1

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 $95 million. That figure was $124 million in Capella Education Company (NASDAQ:CPLA)’s case. Synergy Pharmaceuticals Inc (NASDAQ:SGYP) is the most popular stock in this table. On the other hand, Veritiv Corp (NYSE:VRTV) is the least popular one with only 9 bullish hedge fund positions. Capella Education Company (NASDAQ:CPLA) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Synergy Pharmaceuticals Inc (NASDAQ:SGYP) might be a better candidate to consider a long position.

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