Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 12.1% in 2019 (through May 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 18.7% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Cushman & Wakefield plc (NYSE:CWK).
Is Cushman & Wakefield plc (NYSE:CWK) a buy, sell, or hold? Money managers are betting on the stock. The number of bullish hedge fund positions rose by 13 lately. Our calculations also showed that cwk isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most market participants, hedge funds are seen as underperforming, outdated investment vehicles of the past. While there are over 8000 funds trading at the moment, Our experts hone in on the bigwigs of this group, approximately 750 funds. Most estimates calculate that this group of people orchestrate bulk of the hedge fund industry’s total capital, and by tracking their finest equity investments, Insider Monkey has uncovered a number of investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to take a gander at the recent hedge fund action surrounding Cushman & Wakefield plc (NYSE:CWK).
How are hedge funds trading Cushman & Wakefield plc (NYSE:CWK)?
Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in CWK 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.
Among these funds, Lakewood Capital Management held the most valuable stake in Cushman & Wakefield plc (NYSE:CWK), which was worth $61.2 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $50.9 million worth of shares. Moreover, Capital Growth Management, Land & Buildings Investment Management, and Millennium Management were also bullish on Cushman & Wakefield plc (NYSE:CWK), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have been driving this bullishness. Zimmer Partners, managed by Stuart J. Zimmer, assembled the largest position in Cushman & Wakefield plc (NYSE:CWK). Zimmer Partners had $15.6 million invested in the company at the end of the quarter. John Khoury’s Long Pond Capital also initiated a $13.4 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, David Rodriguez-Fraile’s BlueMar Capital Management, and Steve Cohen’s Point72 Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cushman & Wakefield plc (NYSE:CWK) but similarly valued. These stocks are Armstrong World Industries, Inc. (NYSE:AWI), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), American Eagle Outfitters Inc. (NYSE:AEO), and Wyndham Destinations, Inc. (NYSE:WYND). This group of stocks’ market valuations match CWK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AWI | 25 | 521911 | -1 |
| GGAL | 17 | 114741 | -2 |
| AEO | 25 | 459761 | -2 |
| WYND | 25 | 139648 | 5 |
| Average | 23 | 309015 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $309 million. That figure was $309 million in CWK’s case. Armstrong World Industries, Inc. (NYSE:AWI) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Cushman & Wakefield plc (NYSE:CWK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CWK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CWK were disappointed as the stock returned -2.8% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
