There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze CME Group Inc (NASDAQ:CME).
CME Group Inc (NASDAQ:CME) investors should be aware of a decrease in the activity from the world’s largest hedge funds of late. CME Group Inc (NASDAQ:CME) was in 42 hedge funds’ portfolios at the end of the third quarter of 2015. There were 45 hedge funds in our database with CME Group Inc (NASDAQ:CME) holdings 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 Thomson Reuters Corporation (USA) (NYSE:TRI), Broadcom Corporation (NASDAQ:BRCM), and Travelers Companies Inc (NYSE:TRV) to gather more data points.
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To most traders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are more than 8000 funds trading at the moment, Our experts look at the aristocrats of this club, about 700 funds. These investment experts watch over the majority of all hedge funds’ total asset base, and by watching their matchless investments, Insider Monkey has unearthed a few investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, we’re going to take a glance at the key action regarding CME Group Inc (NASDAQ:CME).
How have hedgies been trading CME Group Inc (NASDAQ:CME)?
Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 7% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in CME Group Inc (NASDAQ:CME). Citadel Investment Group has a $190.5 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by William von Mueffling of Cantillon Capital Management, with a $148.4 million position; 3.2% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Seeing as CME Group Inc (NASDAQ:CME) has witnessed a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers who were dropping their full holdings in the third quarter. Intriguingly, GLG Partners sold off the largest position of the 700 funds tracked by Insider Monkey, totaling an estimated $13.4 million in stock, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund cut about $9.1 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to CME Group Inc (NASDAQ:CME). We will take a look at Thomson Reuters Corporation (USA) (NYSE:TRI), Broadcom Corporation (NASDAQ:BRCM), Travelers Companies Inc (NYSE:TRV), and Brookfield Asset Management Inc. (USA) (NYSE:BAM). This group of stocks’ market caps is similar to CME Group Inc (NASDAQ:CME)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRI | 12 | 241724 | -5 |
| BRCM | 67 | 6729781 | -12 |
| TRV | 32 | 742795 | -11 |
| BAM | 23 | 1343401 | 4 |
As you can see, these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $2.26 billion. That figure was $973 million in CME Group Inc (NASDAQ:CME)’s case. Broadcom Corporation (NASDAQ:BRCM) topped the popularity index among these stocks, whereas Thomson Reuters Corporation (USA) (NYSE:TRI) bottomed out, finding a place in only 12 hedge fund portfolios. CME Group Inc (NASDAQ:CME) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Broadcom Corporation (NASDAQ:BRCM) might be a better candidate to consider a long position.
