Is CDW Corporation (CDW) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards CDW Corporation (NASDAQ:CDW).

Is CDW Corporation (NASDAQ:CDW) worth your attention right now? The best stock pickers were turning less bullish. The number of long hedge fund positions decreased by 3 lately. CDW Corporation (NASDAQ:CDW) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic is 43. Our calculations also showed that CDW isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 30 hedge funds in our database with CDW holdings at the end of March.

In the eyes of most investors, hedge funds are perceived as slow, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at present, Our researchers look at the masters of this group, around 850 funds. Most estimates calculate that this group of people oversee the majority of all hedge funds’ total asset base, and by keeping an eye on their unrivaled investments, Insider Monkey has come up with a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Thomas Bancroft - Makaira Partners

Thomas Bancroft of Makaira Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the new hedge fund action regarding CDW Corporation (NASDAQ:CDW).

Do Hedge Funds Think CDW Is A Good Stock To Buy Now?

At Q2’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the first quarter of 2020. On the other hand, there were a total of 40 hedge funds with a bullish position in CDW a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is CDW A Good Stock To Buy?

Among these funds, Select Equity Group held the most valuable stake in CDW Corporation (NASDAQ:CDW), which was worth $1316.1 million at the end of the second quarter. On the second spot was Gobi Capital which amassed $121.5 million worth of shares. AQR Capital Management, Makaira Partners, and LFL Advisers were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to CDW Corporation (NASDAQ:CDW), around 22.31% of its 13F portfolio. Makaira Partners is also relatively very bullish on the stock, designating 10.01 percent of its 13F equity portfolio to CDW.

Seeing as CDW Corporation (NASDAQ:CDW) has witnessed a decline in interest from the smart money, logic holds that there exists a select few fund managers that elected to cut their positions entirely in the second quarter. It’s worth mentioning that Renaissance Technologies dropped the biggest position of the 750 funds tracked by Insider Monkey, comprising an estimated $46 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $8.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds in the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CDW Corporation (NASDAQ:CDW) but similarly valued. These stocks are Ryanair Holdings plc (NASDAQ:RYAAY), Fresenius Medical Care AG & Co. (NYSE:FMS), XP Inc. (NASDAQ:XP), Northern Trust Corporation (NASDAQ:NTRS), Expedia Group Inc (NASDAQ:EXPE), International Paper Company (NYSE:IP), and Baker Hughes Company (NYSE:BKR). This group of stocks’ market values are similar to CDW’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RYAAY 15 456068 1
FMS 5 5127 -7
XP 25 579824 2
NTRS 32 499610 4
EXPE 87 5922167 1
IP 31 209500 -5
BKR 40 1012638 -2
Average 33.6 1240705 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $1241 million. That figure was $1761 million in CDW’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 5 bullish hedge fund positions. CDW Corporation (NASDAQ:CDW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CDW is 34.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on CDW as the stock returned 2% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.