Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Colliers International Group Inc (NASDAQ:CIGI) a bargain? Prominent investors are buying. The number of bullish hedge fund bets improved by 1 in recent months. Our calculations also showed that CIGI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CIGI was in 11 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with CIGI holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the fresh hedge fund action surrounding Colliers International Group Inc (NASDAQ:CIGI).
How have hedgies been trading Colliers International Group Inc (NASDAQ:CIGI)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in CIGI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Spruce House Investment Management held the most valuable stake in Colliers International Group Inc (NASDAQ:CIGI), which was worth $449.8 million at the end of the third quarter. On the second spot was BloombergSen which amassed $182.7 million worth of shares. Renaissance Technologies, D E Shaw, and Two Sigma Advisors 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 Spruce House Investment Management allocated the biggest weight to Colliers International Group Inc (NASDAQ:CIGI), around 16.27% of its 13F portfolio. BloombergSen is also relatively very bullish on the stock, dishing out 10.9 percent of its 13F equity portfolio to CIGI.
Consequently, key hedge funds were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Colliers International Group Inc (NASDAQ:CIGI). Marshall Wace had $0.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.5 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to Colliers International Group Inc (NASDAQ:CIGI). These stocks are Rexnord Corp (NYSE:RXN), Verint Systems Inc. (NASDAQ:VRNT), FireEye Inc (NASDAQ:FEYE), and Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE). This group of stocks’ market values match CIGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RXN | 19 | 213644 | -1 |
| VRNT | 21 | 268774 | -2 |
| FEYE | 29 | 255297 | 0 |
| COKE | 14 | 20018 | 3 |
| Average | 20.75 | 189433 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $714 million in CIGI’s case. FireEye Inc (NASDAQ:FEYE) is the most popular stock in this table. On the other hand Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Colliers International Group Inc (NASDAQ:CIGI) is even less popular than COKE. Hedge funds dodged a bullet by taking a bearish stance towards CIGI. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CIGI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CIGI investors were disappointed as the stock returned -3.8% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
