Is CoStar Group Inc (CSGP) a Good Buy?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like CoStar Group Inc (NASDAQ:CSGP).

CoStar Group Inc shareholders have witnessed an increase in support from the world’s most elite money managers recently. At the end of this article we will also compare CSGP to other stocks including Grupo Aeroportuario del Pacifico (ADR) (NYSE:PAC), RPM International Inc. (NYSE:RPM), and Jack Henry & Associates, Inc. (NASDAQ:JKHY) to get a better sense of its popularity.

Now, let’s take a gander at the fresh action surrounding CoStar Group Inc (NASDAQ:CSGP).

Hedge fund activity in CoStar Group Inc (NASDAQ:CSGP)

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Leonard A. Potter’s Wildcat Capital Management has the most valuable position in CoStar Group Inc (NASDAQ:CSGP), worth close to $45.7 million, amounting to 17.1% of its total 13F portfolio. Coming in second is Daruma Asset Management, led by Mariko Gordon, holding a $44.9 million position; 2.8% of its 13F portfolio is allocated to the stock. Other peers that hold long positions encompass Paul Reeder and Edward Shapiro’s PAR Capital Management, Jim Simons’ Renaissance Technologies and David Forster and Peter Wilton’s IBIS Capital Partners.

As one would reasonably expect, key money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, created the most valuable position in CoStar Group Inc (NASDAQ:CSGP). Renaissance Technologies had $10.9 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $0.4 million position during the quarter. The following funds were also among the new CSGP investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Benjamin A. Smith’s Laurion Capital Management, and Peter Muller’s PDT Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CoStar Group Inc (NASDAQ:CSGP) but similarly valued. We will take a look at Grupo Aeroportuario del Pacifico (ADR) (NYSE:PAC), RPM International Inc. (NYSE:RPM), Jack Henry & Associates, Inc. (NASDAQ:JKHY), and DDR Corp (NYSE:DDR). This group of stocks’ market caps are similar to CSGP’s market cap.

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 $126 million. That figure was $140 million in CSGP’s case. RPM International Inc. (NYSE:RPM) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (ADR) (NYSE:PAC) is the least popular one with only 5 bullish hedge fund positions. CoStar Group Inc (NASDAQ:CSGP) is the most popular stock in this group which makes it worth a closer look.