What Do Hedge Funds Think of Cornerstone OnDemand, Inc. (CSOD)?

A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Cornerstone OnDemand, Inc. (NASDAQ:CSOD) during the quarter.

Cornerstone OnDemand, Inc. was in 21 hedge funds’ portfolios at the end of the third quarter of 2015. CSOD has experienced a decrease in hedge fund interest recently. There were 22 hedge funds in our database with CSOD 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 The Buckle, Inc. (NYSE:BKE), Grand Canyon Education Inc (NASDAQ:LOPE), and Plantronics, Inc. (NYSE:PLT) to gather more data points.

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To the average investor there are numerous methods investors can use to appraise stocks. A duo of the most innovative methods are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the best fund managers can beat their index-focused peers by a significant amount (see the details here).

With all of this in mind, we’re going to check out the latest action encompassing Cornerstone OnDemand, Inc. (NASDAQ:CSOD).

How have hedgies been trading Cornerstone OnDemand, Inc. (NASDAQ:CSOD)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Eminence Capital, managed by Ricky Sandler, holds the largest position in Cornerstone OnDemand, Inc. (NASDAQ:CSOD). Eminence Capital has a $65.7 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Glenn J. Krevlin of Glenhill Advisors, with a $32.2 million position; 2.5% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Vivek Mehta and Aaron Husock’s ShearLink Capital, Sanford J. Colen’s Apex Capital and Robert G. Moses’s RGM Capital.

Because Cornerstone OnDemand, Inc. (NASDAQ:CSOD) has faced falling interest from hedge fund managers, it’s safe to say that there is a sect of hedgies who sold off their full holdings by the end of the third quarter. At the top of the heap, David S. Winter and David J. Millstone’s 40 North Management said goodbye to the largest position of the 700 funds followed by Insider Monkey, comprising about $6.9 million in stock. Clint Carlson’s fund, Carlson Capital, also dropped its stock, about $5.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cornerstone OnDemand, Inc. (NASDAQ:CSOD) but similarly valued. These stocks are The Buckle, Inc. (NYSE:BKE), Grand Canyon Education Inc (NASDAQ:LOPE), Plantronics, Inc. (NYSE:PLT), and CACI International Inc (NYSE:CACI). This group of stocks’ market caps match CSOD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BKE 16 258393 3
LOPE 16 168270 1
PLT 15 95972 -1
CACI 14 63473 -2

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $261 million in CSOD’s case. The Buckle, Inc. (NYSE:BKE) is the most popular stock in this table. On the other hand CACI International Inc (NYSE:CACI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cornerstone OnDemand, Inc. (NASDAQ:CSOD) 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.