Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Conduent Incorporated (NYSE:CNDT) has experienced an increase in support from the world’s most elite money managers of late. CNDT was in 34 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with CNDT holdings at the end of the previous quarter. Our calculations also showed that cndt isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the recent hedge fund action regarding Conduent Incorporated (NYSE:CNDT).
Hedge fund activity in Conduent Incorporated (NYSE:CNDT)
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in CNDT heading into this year. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Conduent Incorporated (NYSE:CNDT) was held by Icahn Capital LP, which reported holding $446 million worth of stock at the end of September. It was followed by Iridian Asset Management with a $152.8 million position. Other investors bullish on the company included Highline Capital Management, Glenview Capital, and Renaissance Technologies.
Consequently, key money managers have jumped into Conduent Incorporated (NYSE:CNDT) headfirst. Iridian Asset Management, managed by David Cohen and Harold Levy, established the biggest position in Conduent Incorporated (NYSE:CNDT). Iridian Asset Management had $152.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $36.6 million investment in the stock during the quarter. The following funds were also among the new CNDT investors: Sander Gerber’s Hudson Bay Capital Management, Guy Shahar’s DSAM Partners, and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks similar to Conduent Incorporated (NYSE:CNDT). These stocks are 51job, Inc. (NASDAQ:JOBS), Hospitality Properties Trust (NYSE:HPT), YY Inc (NASDAQ:YY), and Casey’s General Stores, Inc. (NASDAQ:CASY). This group of stocks’ market caps resemble CNDT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JOBS | 14 | 45623 | 2 |
| HPT | 16 | 86991 | 0 |
| YY | 25 | 201060 | 4 |
| CASY | 18 | 88964 | 1 |
| Average | 18.25 | 105660 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $1.16 billion in CNDT’s case. YY Inc (NASDAQ:YY) is the most popular stock in this table. On the other hand 51job, Inc. (NASDAQ:JOBS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Conduent Incorporated (NYSE:CNDT) 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.
Disclosure: None. This article was originally published at Insider Monkey.
