At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Is CBIZ, Inc. (NYSE:CBZ) the right pick for your portfolio? Hedge funds are in a pessimistic mood. The number of long hedge fund bets decreased by 3 in recent months. Our calculations also showed that cbz isn't among the 30 most popular stocks among hedge funds. CBZ was in 12 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 15 hedge funds in our database with CBZ holdings at the end of the previous quarter.
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 market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's take a look at the key hedge fund action encompassing CBIZ, Inc. (NYSE:CBZ).
How are hedge funds trading CBIZ, Inc. (NYSE:CBZ)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in CBZ a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Cardinal Capital held the most valuable stake in CBIZ, Inc. (NYSE:CBZ), which was worth $61.1 million at the end of the fourth quarter. On the second spot was P2 Capital Partners which amassed $53.1 million worth of shares. Moreover, Renaissance Technologies, D E Shaw, and Marshall Wace LLP were also bullish on CBIZ, Inc. (NYSE:CBZ), allocating a large percentage of their portfolios to this stock.
Seeing as CBIZ, Inc. (NYSE:CBZ) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Gregg J. Powers's Private Capital Management cut the biggest position of the 700 funds followed by Insider Monkey, valued at close to $6.1 million in stock. Israel Englander's fund, Millennium Management, also dropped its stock, about $2.6 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds last quarter.
Let's check out hedge fund activity in other stocks similar to CBIZ, Inc. (NYSE:CBZ). We will take a look at National Western Life Group, Inc. (NASDAQ:NWLI), Amerisafe, Inc. (NASDAQ:AMSF), Bloom Energy Corporation (NYSE:BE), and Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). This group of stocks' market caps are similar to CBZ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWLI,9,17248,2 AMSF,11,14091,0 BE,8,9690,0 IOVA,22,542031,-5 Average,12.5,145765,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $146 million in CBZ's case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Bloom Energy Corporation (NYSE:BE) is the least popular one with only 8 bullish hedge fund positions. CBIZ, Inc. (NYSE:CBZ) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CBZ wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CBZ investors were disappointed as the stock returned 3.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.