Is Covance Inc. (NYSE:CVD) the right investment to pursue these days? The best stock pickers are buying. The number of bullish hedge fund positions went up by 4 recently.
If you’d ask most stock holders, hedge funds are seen as slow, old investment vehicles of years past. While there are more than 8000 funds with their doors open today, we hone in on the moguls of this club, close to 450 funds. Most estimates calculate that this group has its hands on most of the hedge fund industry’s total capital, and by paying attention to their top picks, we have revealed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as important, positive insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are plenty of reasons for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).
Consequently, let’s take a peek at the latest action regarding Covance Inc. (NYSE:CVD).
How are hedge funds trading Covance Inc. (NYSE:CVD)?
At Q1’s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of 36% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably.
Of the funds we track, Columbus Circle Investors, managed by Donald Chiboucis, holds the largest position in Covance Inc. (NYSE:CVD). Columbus Circle Investors has a $38.6 million position in the stock, comprising 0.3% of its 13F portfolio. On Columbus Circle Investors’s heels is Royce & Associates, managed by Chuck Royce, which held a $25.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and Bruce Kovner’s Caxton Associates LP.
Consequently, specific money managers have jumped into Covance Inc. (NYSE:CVD) headfirst. Millennium Management, managed by Israel Englander, initiated the most valuable position in Covance Inc. (NYSE:CVD). Millennium Management had 16.6 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates LP also initiated a $5.4 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Dmitry Balyasny’s Balyasny Asset Management, and Barton Biggs’s Traxis Partners.
What do corporate executives and insiders think about Covance Inc. (NYSE:CVD)?
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time period, Covance Inc. (NYSE:CVD) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Covance Inc. (NYSE:CVD). These stocks are Laboratory Corp. of America Holdings (NYSE:LH), Alere Inc (NYSE:ALR), PAREXEL International Corporation (NASDAQ:PRXL), Mettler-Toledo International Inc. (NYSE:MTD), and PerkinElmer, Inc. (NYSE:PKI). This group of stocks are in the medical laboratories & research industry and their market caps resemble CVD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Laboratory Corp. of America Holdings (NYSE:LH) | 25 | 0 | 6 |
| Alere Inc (NYSE:ALR) | 25 | 0 | 3 |
| PAREXEL International Corporation (NASDAQ:PRXL) | 12 | 0 | 14 |
| Mettler-Toledo International Inc. (NYSE:MTD) | 13 | 0 | 8 |
| PerkinElmer, Inc. (NYSE:PKI) | 29 | 0 | 8 |
With the results demonstrated by our studies, everyday investors must always monitor hedge fund and insider trading sentiment, and Covance Inc. (NYSE:CVD) is an important part of this process.
