Did Hedge Funds Make The Right Call On Columbia Property Trust Inc (CXP)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Columbia Property Trust Inc (NYSE:CXP) and determine whether hedge funds skillfully traded this stock.

Columbia Property Trust Inc (NYSE:CXP) has experienced a decrease in enthusiasm from smart money recently. Our calculations also showed that CXP 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.

In the eyes of most stock holders, hedge funds are seen as unimportant, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the elite of this club, about 850 funds. These hedge fund managers administer most of the hedge fund industry’s total capital, and by observing their highest performing stock picks, Insider Monkey has deciphered a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Winters

David S. Winter of 40 North Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to go over the new hedge fund action encompassing Columbia Property Trust Inc (NYSE:CXP).

How are hedge funds trading Columbia Property Trust Inc (NYSE:CXP)?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in CXP a year ago. So, let’s review 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 Columbia Property Trust Inc (NYSE:CXP), which was worth $10.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $8.4 million worth of shares. Millennium Management, Arrowstreet Capital, and 40 North Management 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 40 North Management allocated the biggest weight to Columbia Property Trust Inc (NYSE:CXP), around 0.19% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to CXP.

Due to the fact that Columbia Property Trust Inc (NYSE:CXP) has faced falling interest from the smart money, it’s easy to see that there was a specific group of hedgies who sold off their full holdings in the first quarter. Intriguingly, Paul Tudor Jones’s Tudor Investment Corp said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising close to $1.5 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $0.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 5 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to Columbia Property Trust Inc (NYSE:CXP). These stocks are United Community Banks Inc (NASDAQ:UCBI), SPX Corporation (NYSE:SPXC), Redfin Corporation (NASDAQ:RDFN), and Progress Software Corporation (NASDAQ:PRGS). This group of stocks’ market valuations are closest to CXP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UCBI 11 28692 -5
SPXC 14 47679 -5
RDFN 20 106902 5
PRGS 22 197676 2
Average 16.75 95237 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $51 million in CXP’s case. Progress Software Corporation (NASDAQ:PRGS) is the most popular stock in this table. On the other hand United Community Banks Inc (NASDAQ:UCBI) is the least popular one with only 11 bullish hedge fund positions. Columbia Property Trust Inc (NYSE:CXP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 18.6% in 2020 through July 27th but beat the market by 17.1 percentage points. Unfortunately CXP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CXP were disappointed as the stock returned -4.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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