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Is CGI Inc. (GIB) Going to Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of CGI Inc. (NYSE:GIB) based on that data.

CGI Inc. (NYSE:GIB) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that GIB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are viewed as slow, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, Our experts hone in on the leaders of this club, around 850 funds. These investment experts preside over most of all hedge funds’ total asset base, and by following their unrivaled equity investments, Insider Monkey has formulated many investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the key hedge fund action regarding CGI Inc. (NYSE:GIB).

Hedge fund activity in CGI Inc. (NYSE:GIB)

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GIB over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is GIB A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in CGI Inc. (NYSE:GIB). Arrowstreet Capital has a $121 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $28.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise D. E. Shaw’s D E Shaw, Noam Gottesman’s GLG Partners and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to CGI Inc. (NYSE:GIB), around 4.75% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.38 percent of its 13F equity portfolio to GIB.

Judging by the fact that CGI Inc. (NYSE:GIB) has witnessed declining sentiment from the smart money, we can see that there was a specific group of hedge funds that elected to cut their positions entirely in the first quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital dropped the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $0.7 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to CGI Inc. (NYSE:GIB). We will take a look at Cheniere Energy Partners LP (NYSE:CQP), iQIYI, Inc. (NASDAQ:IQ), Amcor plc (NYSE:AMCR), and Leidos Holdings Inc (NYSE:LDOS). This group of stocks’ market values are closest to GIB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CQP 3 814865 -4
IQ 28 983179 10
AMCR 19 208401 9
LDOS 30 571063 3
Average 20 644377 4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $247 million in GIB’s case. Leidos Holdings Inc (NYSE:LDOS) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. CGI Inc. (NYSE:GIB) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately GIB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GIB investors were disappointed as the stock returned 19% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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