The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Cushman & Wakefield plc (NYSE:CWK) based on those filings.
Is CWK a good stock to buy now? Money managers were cutting their exposure. The number of long hedge fund bets were trimmed by 5 recently. Cushman & Wakefield plc (NYSE:CWK) was in 12 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 26. 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 for a quick look at the top 5 stocks).
Video: 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Stuart Zimmer Zimmer Partners
Stuart Zimmer of Zimmer Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's go over the latest hedge fund action encompassing Cushman & Wakefield plc (NYSE:CWK).
Do Hedge Funds Think CWK Is A Good Stock To Buy Now?
At third quarter's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CWK over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cushman & Wakefield plc (NYSE:CWK) was held by Lakewood Capital Management, which reported holding $37.6 million worth of stock at the end of September. It was followed by Ancient Art (Teton Capital) with a $10 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and Zimmer Partners. In terms of the portfolio weights assigned to each position Lakewood Capital Management allocated the biggest weight to Cushman & Wakefield plc (NYSE:CWK), around 1.81% of its 13F portfolio. Ancient Art (Teton Capital) is also relatively very bullish on the stock, dishing out 1.37 percent of its 13F equity portfolio to CWK.
Since Cushman & Wakefield plc (NYSE:CWK) has faced falling interest from the smart money, we can see that there exists a select few hedgies that decided to sell off their positions entirely heading into Q4. It's worth mentioning that Ken Griffin's Citadel Investment Group dumped the biggest investment of all the hedgies monitored by Insider Monkey, worth about $5.2 million in stock. Renaissance Technologies, also dropped its stock, about $3.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cushman & Wakefield plc (NYSE:CWK) but similarly valued. We will take a look at Avista Corp (NYSE:AVA), Fabrinet (NYSE:FN), Trinity Industries, Inc. (NYSE:TRN), Nelnet, Inc. (NYSE:NNI), Wintrust Financial Corporation (NASDAQ:WTFC), Revolution Medicines, Inc. (NASDAQ:RVMD), and Mercury General Corporation (NYSE:MCY). This group of stocks' market values match CWK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVA,20,74564,-1 FN,17,74880,-6 TRN,23,766000,-2 NNI,13,133382,1 WTFC,20,113331,-3 RVMD,15,371222,2 MCY,21,152030,4 Average,18.4,240773,-0.7 [/table]
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $87 million in CWK's case. Trinity Industries, Inc. (NYSE:TRN) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Cushman & Wakefield plc (NYSE:CWK) is even less popular than NNI. Our overall hedge fund sentiment score for CWK is 13.8. 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. Hedge funds clearly dropped the ball on CWK as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CWK as the stock returned 58% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
