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Did Hedge Funds Drop The Ball On Colliers International Group Inc (CIGI) ?

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the second quarter and hedging or reducing many of their long positions. Some fund managers like this one are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Colliers International Group Inc (NASDAQ:CIGI).

Colliers International Group Inc (NASDAQ:CIGI) has experienced a decrease in hedge fund sentiment recently. Our calculations also showed that CIGI isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

CIGI_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action surrounding Colliers International Group Inc (NASDAQ:CIGI).

How have hedgies been trading Colliers International Group Inc (NASDAQ:CIGI)?

Heading into the third quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CIGI over the last 16 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Blair Levinsky of Waratah Capital Advisors

More specifically, Spruce House Investment Management was the largest shareholder of Colliers International Group Inc (NASDAQ:CIGI), with a stake worth $427.9 million reported as of the end of March. Trailing Spruce House Investment Management was BloombergSen, which amassed a stake valued at $173.5 million. Renaissance Technologies, Waratah Capital Advisors, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Because Colliers International Group Inc (NASDAQ:CIGI) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers who sold off their positions entirely by the end of the second quarter. It’s worth mentioning that Cliff Asness’s AQR Capital Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $1.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $0.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Colliers International Group Inc (NASDAQ:CIGI) but similarly valued. We will take a look at Stantec Inc. (NYSE:STN), BlackLine, Inc. (NASDAQ:BL), Sotheby’s (NYSE:BID), and PotlatchDeltic Corporation (NASDAQ:PCH). This group of stocks’ market caps are closest to CIGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STN 6 71062 1
BL 15 94921 -5
BID 20 739218 2
PCH 12 321079 -5
Average 13.25 306570 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $715 million in CIGI’s case. Sotheby’s (NYSE:BID) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. Colliers International Group Inc (NASDAQ:CIGI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CIGI, though not to the same extent, as the stock returned 4.8% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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