CubeSmart (CUBE): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Is CubeSmart (NYSE:CUBE) the right investment to pursue these days? Investors who are in the know are turning bullish. The number of long hedge fund positions went up by 6 recently.

In the eyes of most investors, hedge funds are viewed as slow, old investment tools of yesteryear. While there are more than 8000 funds trading at the moment, we at Insider Monkey look at the aristocrats of this club, close to 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by tracking their best investments, we have determined a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, optimistic insider trading sentiment is another way to parse down the investments you’re interested in. There are lots of stimuli for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand where to look (learn more here).

Now, let’s take a gander at the key action encompassing CubeSmart (NYSE:CUBE).

What does the smart money think about CubeSmart (NYSE:CUBE)?

Heading into Q2, a total of 10 of the hedge funds we track were long in this stock, a change of 150% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully.

CubeSmart (CUBE)Of the funds we track, Capital Growth Management, managed by Ken Heebner, holds the most valuable position in CubeSmart (NYSE:CUBE). Capital Growth Management has a $38.6 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Jeffrey Furber of AEW Capital Management, with a $26.6 million position; 0.7% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Dmitry Balyasny’s Balyasny Asset Management, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest position in CubeSmart (NYSE:CUBE). Balyasny Asset Management had 2.5 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $1.8 million position during the quarter. The following funds were also among the new CUBE investors: Matthew Tewksbury’s Stevens Capital Management, Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital, and Ken Griffin’s Citadel Investment Group.

How have insiders been trading CubeSmart (NYSE:CUBE)?

Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, CubeSmart (NYSE:CUBE) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to CubeSmart (NYSE:CUBE). These stocks are Eastgroup Properties Inc (NYSE:EGP), First Industrial Realty Trust, Inc. (NYSE:FR), Potlatch Corporation (NASDAQ:PCH), Sovran Self Storage Inc (NYSE:SSS), and DCT Industrial Trust Inc. (NYSE:DCT). This group of stocks are the members of the reit – industrial industry and their market caps match CUBE’s market cap.

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