Is CyrusOne Inc (NASDAQ:CONE) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Bill Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
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Is CyrusOne Inc (NASDAQ:CONE) a healthy stock for your portfolio? Prominent investors are selling. The number of bullish hedge fund bets was cut by five recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Monro Muffler Brake Inc (NASDAQ:MNRO), WP Glimcher Inc (NYSE:WPG), and Zulily Inc (NASDAQ:ZU) to gather more data points.
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In today’s marketplace there are a large number of metrics shareholders employ to size up their holdings. A duo of the most innovative metrics are hedge fund and insider trading interest. Hedge fund experts at Insider Monkey have shown that, historically, those who follow the best picks of the elite money managers can outpace their index-focused peers by a significant margin (see the details here).
Now, let’s take a peek at the latest action encompassing CyrusOne Inc (NASDAQ:CONE).
How have hedgies been trading CyrusOne Inc (NASDAQ:CONE)?
Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 22% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in CyrusOne Inc (NASDAQ:CONE), worth close to $77.1 million, comprising 0.1% of its total 13F portfolio. Coming in second is Tremblant Capital, led by Brett Barakett, holding a $55.7 million position; 3.6% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass Andrew Goldman’s Seven Locks Capital Management, Greg Poole’s Echo Street Capital Management, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital.
Judging by the fact that CyrusOne Inc (NASDAQ:CONE) has faced bearish sentiment from the smart money, it’s easy to see that there exists a select few fund managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Nick Niell’s Arrowgrass Capital Partners cut the largest investment of all the hedgies followed by Insider Monkey, worth an estimated $14.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $12.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by five funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to CyrusOne Inc (NASDAQ:CONE). These stocks are Monro Muffler Brake Inc (NASDAQ:MNRO), WP Glimcher Inc (NYSE:WPG), Zulily Inc (NASDAQ:ZU), and National Health Investors Inc (NYSE:NHI). This group of stocks’ market valuations are similar to CyrusOne Inc (NASDAQ:CONE)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNRO | 16 | 266259 | 5 |
| WPG | 16 | 99115 | -3 |
| ZU | 14 | 118900 | -1 |
| NHI | 12 | 71580 | 4 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $139 million, compared to $227 million of CyrusOne shares held by the same pool of investors. Monro Muffler Brake Inc (NASDAQ:MNRO) is the most popular stock in this table. On the other hand, National Health Investors Inc (NYSE:NHI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks CyrusOne Inc (NASDAQ:CONE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio, though you should be cautious nonetheless, given the declining sentiment among top investors.
