In this article we will check out the progression of hedge fund sentiment towards CubeSmart (NYSE:CUBE) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
CubeSmart (NYSE:CUBE) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that CUBE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are numerous indicators stock traders can use to analyze their holdings. Two of the most innovative indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a very impressive margin (see the details here).
Ken Heebner of Capital Growth Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the fresh hedge fund action surrounding CubeSmart (NYSE:CUBE).
Hedge fund activity in CubeSmart (NYSE:CUBE)
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in CUBE a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CubeSmart (NYSE:CUBE) was held by Diamond Hill Capital, which reported holding $102.1 million worth of stock at the end of September. It was followed by Echo Street Capital Management with a $17.9 million position. Other investors bullish on the company included Capital Growth Management, Renaissance Technologies, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to CubeSmart (NYSE:CUBE), around 2.26% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, setting aside 0.69 percent of its 13F equity portfolio to CUBE.
Because CubeSmart (NYSE:CUBE) has faced falling interest from hedge fund managers, we can see that there is a sect of funds that elected to cut their positions entirely by the end of the first quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of all the hedgies watched by Insider Monkey, totaling close to $7.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $4.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 9 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks similar to CubeSmart (NYSE:CUBE). We will take a look at Pearson PLC (NYSE:PSO), Wix.Com Ltd (NASDAQ:WIX), Lincoln National Corporation (NYSE:LNC), and Lamar Advertising Company (REIT) (NASDAQ:LAMR). This group of stocks’ market caps resemble CUBE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSO | 8 | 10618 | 3 |
| WIX | 29 | 597387 | -5 |
| LNC | 26 | 602265 | -14 |
| LAMR | 34 | 217189 | 6 |
| Average | 24.25 | 356865 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was $186 million in CUBE’s case. Lamar Advertising Company (REIT) (NASDAQ:LAMR) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 8 bullish hedge fund positions. CubeSmart (NYSE:CUBE) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately CUBE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CUBE investors were disappointed as the stock returned 0.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
