The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about CyrusOne Inc (NASDAQ:CONE)?
Is CyrusOne Inc (NASDAQ:CONE) a splendid investment right now? The smart money is turning less bullish. The number of bullish hedge fund positions fell by 1 recently. Our calculations also showed that CONE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action surrounding CyrusOne Inc (NASDAQ:CONE).
Hedge fund activity in CyrusOne Inc (NASDAQ:CONE)
At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in CONE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in CyrusOne Inc (NASDAQ:CONE), which was worth $88.7 million at the end of the third quarter. On the second spot was Tremblant Capital which amassed $61.4 million worth of shares. Balyasny Asset Management, Fisher Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to CyrusOne Inc (NASDAQ:CONE), around 9.47% of its 13F portfolio. Tremblant Capital is also relatively very bullish on the stock, setting aside 3.86 percent of its 13F equity portfolio to CONE.
Due to the fact that CyrusOne Inc (NASDAQ:CONE) has witnessed falling interest from hedge fund managers, we can see that there exists a select few funds that elected to cut their positions entirely by the end of the first quarter. Intriguingly, John Khoury’s Long Pond Capital dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $73.8 million in stock. Jeffrey Hinkle’s fund, Shoals Capital Management, also sold off its stock, about $10.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 1 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to CyrusOne Inc (NASDAQ:CONE). These stocks are Service Corporation International (NYSE:SCI), PTC Inc (NASDAQ:PTC), Algonquin Power & Utilities Corp. (NYSE:AQN), and Lennox International Inc. (NYSE:LII). This group of stocks’ market caps resemble CONE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCI | 30 | 398250 | 12 |
| PTC | 35 | 1181835 | 0 |
| AQN | 14 | 253831 | 1 |
| LII | 21 | 169377 | -11 |
| Average | 25 | 500823 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $317 million in CONE’s case. PTC Inc (NASDAQ:PTC) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 14 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on CONE, though not to the same extent, as the stock returned 20.4% during the first two months of the second quarter and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
