We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 June. At Insider Monkey, we follow nearly 835 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 Columbia Property Trust Inc (NYSE:CXP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Columbia Property Trust Inc (NYSE:CXP) was in 22 hedge funds’ portfolios at the end of the fourth quarter of 2019. CXP has experienced an increase in activity from the world’s largest hedge funds lately. There were 15 hedge funds in our database with CXP positions at the end of the previous quarter. Our calculations also showed that CXP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 41 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Dmitry Balyasny of Balyasny Asset Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action surrounding Columbia Property Trust Inc (NYSE:CXP).
How have hedgies been trading Columbia Property Trust Inc (NYSE:CXP)?
Heading into the first quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in CXP over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Columbia Property Trust Inc (NYSE:CXP), with a stake worth $31.1 million reported as of the end of September. Trailing Renaissance Technologies was Balyasny Asset Management, which amassed a stake valued at $26.3 million. Citadel Investment Group, Millennium Management, and Marshall Wace LLP 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 Algert Coldiron Investors allocated the biggest weight to Columbia Property Trust Inc (NYSE:CXP), around 0.2% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, designating 0.16 percent of its 13F equity portfolio to CXP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in Columbia Property Trust Inc (NYSE:CXP). Balyasny Asset Management had $26.3 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new CXP investors: John Overdeck and David Siegel’s Two Sigma Advisors, J. Alan Reid, Jr.’s Forward Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Columbia Property Trust Inc (NYSE:CXP) but similarly valued. These stocks are Acushnet Holdings Corp. (NYSE:GOLF), United Community Banks Inc (NASDAQ:UCBI), LexinFintech Holdings Ltd. (NASDAQ:LX), and Xenia Hotels & Resorts Inc (NYSE:XHR). This group of stocks’ market caps match CXP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOLF | 16 | 22328 | 3 |
| UCBI | 16 | 56723 | 3 |
| LX | 13 | 117071 | -2 |
| XHR | 11 | 45672 | 2 |
| Average | 14 | 60449 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $123 million in CXP’s case. Acushnet Holdings Corp. (NYSE:GOLF) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Columbia Property Trust Inc (NYSE:CXP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately CXP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CXP were disappointed as the stock returned -48.8% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
