A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Cogent Communications Holdings Inc. (NASDAQ:CCOI) during the quarter.
Cogent Communications Holdings Inc. (NASDAQ:CCOI) investors should be aware of a decrease in hedge fund interest of late. At the end of this article we will also compare CCOI to other stocks including Luxoft Holding Inc (NYSE:LXFT), Phibro Animal Health Corp (NASDAQ:PAHC), and Stag Industrial Inc (NYSE:STAG) to get a better sense of its popularity.
Follow Cogent Communications Holdings Inc. (NASDAQ:CCOI)
Follow Cogent Communications Holdings Inc. (NASDAQ:CCOI)
To the average investor there are plenty of methods stock market investors put to use to value their holdings. A couple of the most under-the-radar methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass the market by a very impressive amount (see the details here).
Keeping this in mind, let’s go over the fresh action encompassing Cogent Communications Holdings Inc. (NASDAQ:CCOI).
Hedge fund activity in Cogent Communications Holdings Inc. (NASDAQ:CCOI)
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw has the most valuable position in Cogent Communications Group, Inc. (NASDAQ:CCOI), worth close to $43.1 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $42.1 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include Barry Lebovits and Joshua Kuntz’s Rivulet Capital, Lee Munder’s Lee Munder Capital Group and Joshua Nash’s Ulysses Management.
Judging by the fact that Cogent Communications Holdings Inc. (NASDAQ:CCOI) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that slashed their entire stakes by the end of the third quarter. It’s worth mentioning that Michael Pausic’s Foxhaven Asset Management dropped the largest position of all the hedgies tracked by Insider Monkey, worth an estimated $31.7 million in stock. Matthew Knauer and Mina Faltas’s fund, Nokota Management, also dumped its stock, about $8 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cogent Communications Holdings Inc. (NASDAQ:CCOI). We will take a look at Luxoft Holding Inc (NYSE:LXFT), Phibro Animal Health Corp (NASDAQ:PAHC), Stag Industrial Inc (NYSE:STAG), and Seritage Growth Properties (NYSE:SRG). All of these stocks’ market caps are similar to CCOI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LXFT | 17 | 131251 | 3 |
| PAHC | 16 | 29428 | 1 |
| STAG | 9 | 69982 | 0 |
| SRG | 23 | 470019 | 23 |
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $248 million in CCOI’s case. Seritage Growth Properties (NYSE:SRG) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 9 bullish hedge fund positions. Cogent Communications Holdings Inc. (NASDAQ:CCOI) 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 SRG might be a better candidate to consider a long position.
