Hedge Funds Are Cashing Out Of CBOE Global Markets Inc (CBOE)

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was CBOE Global Markets Inc (NASDAQ:CBOE).

Is CBOE Global Markets Inc (NASDAQ:CBOE) the right pick for your portfolio? The best stock pickers were becoming less confident. The number of long hedge fund positions went down by 2 in recent months. CBOE Global Markets Inc (NASDAQ:CBOE) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistic is 38. Our calculations also showed that CBOE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 33 hedge funds in our database with CBOE positions at the end of the first 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 S&P 500 ETFs by 79 percentage points since March 2017 (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.

Lee Ainslie of Maverick Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the fresh hedge fund action encompassing CBOE Global Markets Inc (NASDAQ:CBOE).

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

At second quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in CBOE a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in CBOE Global Markets Inc (NASDAQ:CBOE), which was worth $296.3 million at the end of the second quarter. On the second spot was D E Shaw which amassed $135.5 million worth of shares. Horizon Asset Management, Schonfeld Strategic Advisors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Truvvo Partners allocated the biggest weight to CBOE Global Markets Inc (NASDAQ:CBOE), around 12.32% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 3.94 percent of its 13F equity portfolio to CBOE.

Due to the fact that CBOE Global Markets Inc (NASDAQ:CBOE) has faced declining sentiment from hedge fund managers, we can see that there was a specific group of fund managers that elected to cut their entire stakes in the second quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $20 million in stock, and Greg Poole’s Echo Street Capital Management was right behind this move, as the fund dropped about $6.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the second quarter.

Let’s now review hedge fund activity in other stocks similar to CBOE Global Markets Inc (NASDAQ:CBOE). We will take a look at Lennox International Inc. (NYSE:LII), W.R. Berkley Corporation (NYSE:WRB), Vedanta Ltd (NYSE:VEDL), Equitable Holdings, Inc. (NYSE:EQH), Hasbro, Inc. (NASDAQ:HAS), Camden Property Trust (NYSE:CPT), and Athene Holding Ltd. (NYSE:ATH). This group of stocks’ market valuations are similar to CBOE’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $747 million. That figure was $826 million in CBOE’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 10 bullish hedge fund positions. CBOE Global Markets Inc (NASDAQ:CBOE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBOE is 57.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on CBOE as the stock returned 5.5% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Suggested Articles:

• 15 Best Blue Chip Stocks To Buy Now
• 15 Most Expensive Islands to Visit in 2021
• 15 Biggest Companies with Gay CEOs

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