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Is CACI Stock A Buy or Sell?

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is CACI International Inc (NYSE:CACI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is CACI stock a buy? CACI International Inc (NYSE:CACI) was in 28 hedge funds' portfolios at the end of December. The all time high for this statistic is 34. CACI has experienced a decrease in activity from the world's largest hedge funds recently. There were 31 hedge funds in our database with CACI holdings at the end of September. Our calculations also showed that CACI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Fred DiSanto Ancora Advisors
Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's review the new hedge fund action surrounding CACI International Inc (NYSE:CACI).

Do Hedge Funds Think CACI Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CACI over the last 22 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is CACI A Good Stock To Buy?
Is CACI A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in CACI International Inc (NYSE:CACI). Citadel Investment Group has a $107 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Horizon Asset Management, led by Murray Stahl, holding a $95.9 million position; 3.2% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism consist of Phill Gross and Robert Atchinson's Adage Capital Management, D. E. Shaw's D E Shaw and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Akaris Global Partners allocated the biggest weight to CACI International Inc (NYSE:CACI), around 8.7% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 3.19 percent of its 13F equity portfolio to CACI.

Seeing as CACI International Inc (NYSE:CACI) has experienced a decline in interest from hedge fund managers, it's safe to say that there is a sect of hedge funds that elected to cut their positions entirely by the end of the fourth quarter. At the top of the heap, Donald Sussman's Paloma Partners cut the biggest position of the 750 funds monitored by Insider Monkey, valued at close to $2 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also said goodbye to its stock, about $1.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds by the end of the fourth quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as CACI International Inc (NYSE:CACI) but similarly valued. These stocks are Cyberark Software Ltd (NASDAQ:CYBR), Jefferies Financial Group Inc. (NYSE:JEF), Blueprint Medicines Corporation (NASDAQ:BPMC), Grupo Aeroportuario del Pacifico (NYSE:PAC), Lattice Semiconductor Corporation (NASDAQ:LSCC), Exelixis, Inc. (NASDAQ:EXEL), and Tetra Tech, Inc. (NASDAQ:TTEK). This group of stocks' market valuations resemble CACI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYBR,27,455087,2 JEF,33,700199,0 BPMC,38,1246182,4 PAC,4,120455,-2 LSCC,23,265612,-1 EXEL,24,917565,-10 TTEK,29,98927,7 Average,25.4,543432,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $513 million in CACI's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 4 bullish hedge fund positions. CACI International Inc (NYSE:CACI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CACI is 62. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately CACI wasn't nearly as popular as these 30 stocks and hedge funds that were betting on CACI were disappointed as the stock returned 5.3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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