Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Ciena Corporation (NYSE:CIEN) from the perspective of those elite funds.
Is Ciena Corporation (NYSE:CIEN) a healthy stock for your portfolio? Investors who are in the know are getting more optimistic. The number of long hedge fund bets rose by 2 lately. CIEN was in 33 hedge funds’ portfolios at the end of the third quarter of 2015. There were 31 hedge funds in our database with CIEN positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dyax Corp. (NASDAQ:DYAX), G-III Apparel Group, Ltd. (NASDAQ:GIII), and Mercury General Corporation (NYSE:MCY) to gather more data points.
Now, let’s take a look at the new action encompassing Ciena Corporation (NYSE:CIEN).
How are hedge funds trading Ciena Corporation (NYSE:CIEN)?
Heading into Q4, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in Ciena Corporation (NYSE:CIEN), worth close to $39.2 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $32.2 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish consist of Columbus Circle Investors, Kerr Neilson’s Platinum Asset Management and Glenn Russell Dubin’s Highbridge Capital Management.
Now, key money managers have jumped into Ciena Corporation (NASDAQ:CIEN) headfirst. Highland Capital Management, managed by James Dondero, initiated the most outsized position in Ciena Corporation (NYSE:CIEN). Highland Capital Management had $10.5 million invested in the company at the end of the quarter. Benjamin J Taylor’s Sophrosyne Capital also initiated a $8.1 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, David Costen Haley’s HBK Investments, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Ciena Corporation (NYSE:CIEN). We will take a look at Dyax Corp. (NASDAQ:DYAX), G-III Apparel Group, Ltd. (NASDAQ:GIII), Mercury General Corporation (NYSE:MCY), and Deluxe Corporation (NYSE:DLX). This group of stocks’ market valuations are closest to CIEN’s market valuation.
|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 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $259 million in CIEN’s case. Dyax Corp. (NASDAQ:DYAX) is the most popular stock in this table. On the other hand Mercury General Corporation (NYSE:MCY) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Ciena Corporation (NYSE:CIEN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.