Is CubeSmart (CUBE) A Good Stock To Buy?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 7.6% during the last 12 months ending November 21, 2016. Most investors don’t notice that less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 mid-cap stocks among the best performing hedge funds had an average return of 18% during the same period. Hedge funds had bad stock picks like everyone else. We are sure you have read about their worst picks, like Valeant, in the media over the past year. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about CubeSmart (NYSE:CUBE) .

CubeSmart (NYSE:CUBE) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of the third quarter of 2016, same as at the end of June. At the end of this article we will also compare CUBE to other stocks including Murphy Oil Corporation (NYSE:MUR), VCA Antech Inc (NASDAQ:WOOF), and MarketAxess Holdings Inc. (NASDAQ:MKTX) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with CubeSmart (NYSE:CUBE)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. There was a total of just 9 hedge funds with a bullish position in CUBE at the beginning of this year, so hedge fund ownership of the stock has nearly doubled in 9 months. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AEW Capital Management, led by Jeffrey Furber, holds the most valuable position in CubeSmart (NYSE:CUBE). AEW Capital Management has a $99.1 million position in the stock, comprising 2.1% of its 13F portfolio. On AEW Capital Management’s heels is Israel Englander’s Millennium Management, with an $18.7 million position. Remaining peers that are bullish encompass Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Ken Griffin’s Citadel Investment Group, and Dmitry Balyasny’s Balyasny Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as CubeSmart (NYSE:CUBE) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that decided to sell off their full holdings heading into Q4. It’s worth mentioning that Jim Simons’ Renaissance Technologies dropped the biggest position of the 700 funds followed by Insider Monkey, worth an estimated $21.4 million in stock, and George Hall’s Clinton Group was right behind this move, as the fund dumped about $19.5 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to CubeSmart (NYSE:CUBE). These stocks are Murphy Oil Corporation (NYSE:MUR), VCA Antech Inc (NASDAQ:WOOF), MarketAxess Holdings Inc. (NASDAQ:MKTX), and Herbalife Ltd. (NYSE:HLF). This group of stocks’ market caps match CUBE’s market cap.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.02 billion. That figure was $206 million in CUBE’s case. Herbalife Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Murphy Oil Corporation (NYSE:MUR) is the least popular one with only 16 bullish hedge fund positions. CubeSmart (NYSE:CUBE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HLF might be a better candidate to consider taking a long position in.

Disclosure: None