With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was CyrusOne Inc (NASDAQ:CONE).
Is CyrusOne Inc (CONE) a good stock to buy? Hedge funds were turning bullish. The number of bullish hedge fund positions rose by 5 lately. CyrusOne Inc (NASDAQ:CONE) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that CONE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with CONE holdings at the end of March.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Barry Rosenstein of JANA Partners
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Do Hedge Funds Think CONE Is A Good Stock To Buy Now?
At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in CONE a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in CyrusOne Inc (NASDAQ:CONE) was held by JANA Partners, which reported holding $123.5 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $102 million position. Other investors bullish on the company included Millennium Management, Zimmer Partners, and Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to CyrusOne Inc (NASDAQ:CONE), around 10.19% of its 13F portfolio. Zeno Research is also relatively very bullish on the stock, earmarking 3.26 percent of its 13F equity portfolio to CONE.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, created the largest position in CyrusOne Inc (NASDAQ:CONE). Zimmer Partners had $51 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also initiated a $27.1 million position during the quarter. The other funds with brand new CONE positions are Steve Cohen’s Point72 Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and J. Alan Reid, Jr.’s Forward Management.
Let’s go over hedge fund activity in other stocks similar to CyrusOne Inc (NASDAQ:CONE). These stocks are Flex Ltd. (NASDAQ:FLEX), Commerce Bancshares, Inc. (NASDAQ:CBSH), Aegon N.V. (NYSE:AEG), West Fraser Timber Co. Ltd. (NYSE:WFG), Fiverr International Ltd. (NYSE:FVRR), WEX Inc (NYSE:WEX), and Zions Bancorporation, National Association (NASDAQ:ZION). This group of stocks’ market valuations are similar to CONE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLEX | 43 | 1463275 | -5 |
| CBSH | 16 | 75999 | 3 |
| AEG | 6 | 6164 | 0 |
| WFG | 25 | 591268 | 0 |
| FVRR | 30 | 465684 | 3 |
| WEX | 20 | 474265 | -6 |
| ZION | 24 | 153157 | 0 |
| Average | 23.4 | 461402 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $488 million in CONE’s case. Flex Ltd. (NASDAQ:FLEX) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. CyrusOne Inc (NASDAQ:CONE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CONE is 59.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on CONE as the stock returned 9.3% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
