Is CyrusOne Inc (CONE) Going To Burn These Hedge Funds ?
Nina Todic
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about CyrusOne Inc (NASDAQ:CONE) in this article.
Is CyrusOne Inc (NASDAQ:CONE) ready to rally soon? The smart money is taking a bullish view. The number of long hedge fund bets rose by 3 lately. Our calculations also showed that CONE isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CONE was in 21 hedge funds' portfolios at the end of the third quarter of 2019. There were 18 hedge funds in our database with CONE positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of the past. While there are over 8000 funds in operation at the moment, Our experts choose to focus on the crème de la crème of this group, about 750 funds. These money managers command bulk of all hedge funds' total asset base, and by keeping track of their best equity investments, Insider Monkey has spotted many investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a peek at the fresh hedge fund action regarding CyrusOne Inc (NASDAQ:CONE).
What have hedge funds been doing with CyrusOne Inc (NASDAQ:CONE)?
Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CONE over the last 17 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of CyrusOne Inc (NASDAQ:CONE), with a stake worth $119.5 million reported as of the end of September. Trailing Citadel Investment Group was Fisher Asset Management, which amassed a stake valued at $42.1 million. Melqart Asset Management, York Capital Management, and TIG Advisors 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 11.19% of its 13F portfolio. Melqart Asset Management is also relatively very bullish on the stock, dishing out 2.86 percent of its 13F equity portfolio to CONE.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Melqart Asset Management, managed by Michel Massoud, assembled the most valuable position in CyrusOne Inc (NASDAQ:CONE). Melqart Asset Management had $31.5 million invested in the company at the end of the quarter. James Dinan's York Capital Management also initiated a $26.5 million position during the quarter. The following funds were also among the new CONE investors: Carl Tiedemann and Michael Tiedemann's TIG Advisors, and Anand Parekh's Alyeska Investment Group.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as CyrusOne Inc (NASDAQ:CONE) but similarly valued. We will take a look at SEI Investments Company (NASDAQ:SEIC), Mohawk Industries, Inc. (NYSE:MHK), Crown Holdings, Inc. (NYSE:CCK), and Beyond Meat, Inc. (NASDAQ:BYND). This group of stocks' market caps resemble CONE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEIC,23,390443,1 MHK,32,1522732,-1 CCK,42,1266913,7 BYND,17,92936,1 Average,28.5,818256,2 [/table]
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $315 million in CONE's case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Beyond Meat, Inc. (NASDAQ:BYND) is the least popular one with only 17 bullish hedge fund positions. CyrusOne Inc (NASDAQ:CONE) 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 CONE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CONE investors were disappointed as the stock returned -21.2% 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.
