We are still in an overall bull market and many stocks that smart money investors were piling into 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. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 Cushman & Wakefield plc (NYSE:CWK).
Is Cushman & Wakefield plc (NYSE:CWK) the right investment to pursue these days? Hedge funds are becoming less confident. The number of long hedge fund bets decreased by 4 in recent months. Our calculations also showed that CWK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
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.
Ken Griffin of Citadel Investment Group
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. Let’s view the new hedge fund action surrounding Cushman & Wakefield plc (NYSE:CWK).
What does smart money think about Cushman & Wakefield plc (NYSE:CWK)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CWK over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Cushman & Wakefield plc (NYSE:CWK) was held by Lakewood Capital Management, which reported holding $63.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $52.3 million position. Other investors bullish on the company included Land & Buildings Investment Management, Balyasny Asset Management, and D E Shaw. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to Cushman & Wakefield plc (NYSE:CWK), around 6.2% of its 13F portfolio. Lakewood Capital Management is also relatively very bullish on the stock, dishing out 2.18 percent of its 13F equity portfolio to CWK.
Judging by the fact that Cushman & Wakefield plc (NYSE:CWK) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their positions entirely heading into Q4. Intriguingly, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors cut the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $1.7 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace, also cut its stock, about $1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cushman & Wakefield plc (NYSE:CWK) but similarly valued. These stocks are FirstService Corporation (TSE:FSV), Solaredge Technologies Inc (NASDAQ:SEDG), Cimpress NV (NASDAQ:CMPR), and MSC Industrial Direct Co Inc (NYSE:MSM). This group of stocks’ market valuations are closest to CWK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FSV | 12 | 163650 | 2 |
| SEDG | 20 | 220192 | -3 |
| CMPR | 9 | 705142 | -3 |
| MSM | 21 | 89777 | 5 |
| Average | 15.5 | 294690 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $295 million. That figure was $157 million in CWK’s case. MSC Industrial Direct Co Inc (NYSE:MSM) is the most popular stock in this table. On the other hand Cimpress NV (NASDAQ:CMPR) is the least popular one with only 9 bullish hedge fund positions. Cushman & Wakefield plc (NYSE:CWK) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CWK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CWK investors were disappointed as the stock returned 4.6% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
