Do Hedge Funds Love Colony Capital Inc (CLNY)?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Colony Capital Inc (NYSE:CLNY).

Colony Capital Inc (NYSE:CLNY) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. CLNY was in 20 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with CLNY holdings at the end of the previous quarter. Our calculations also showed that CLNY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are over 8000 funds trading today, Our researchers choose to focus on the crème de la crème of this group, approximately 750 funds. It is estimated that this group of investors orchestrate the lion’s share of all hedge funds’ total capital, and by tracking their inimitable stock picks, Insider Monkey has found several investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually 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 .


Seth Klarman of Baupost Group

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. Let’s take a glance at the new hedge fund action regarding Colony Capital Inc (NYSE:CLNY).

What does smart money think about Colony Capital Inc (NYSE:CLNY)?

Heading into the fourth quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2019. On the other hand, there were a total of 25 hedge funds with a bullish position in CLNY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the most valuable position in Colony Capital Inc (NYSE:CLNY). Baupost Group has a $299.1 million position in the stock, comprising 3.4% of its 13F portfolio. The second largest stake is held by Odey Asset Management Group, managed by Crispin Odey, which holds a $40.3 million position; 4.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass Renaissance Technologies, Martin Whitman’s Third Avenue Management and J. Alan Reid, Jr.’s Forward Management. In terms of the portfolio weights assigned to each position FrontFour Capital Group allocated the biggest weight to Colony Capital Inc (NYSE:CLNY), around 10.11% of its 13F portfolio. Odey Asset Management Group is also relatively very bullish on the stock, designating 4.5 percent of its 13F equity portfolio to CLNY.

Now, some big names have been driving this bullishness. Third Avenue Management, managed by Martin Whitman, established the largest position in Colony Capital Inc (NYSE:CLNY). Third Avenue Management had $10.6 million invested in the company at the end of the quarter. Don Morgan’s Brigade Capital also made a $7.7 million investment in the stock during the quarter. The other funds with brand new CLNY positions are David Harding’s Winton Capital Management, Michael Gelband’s ExodusPoint Capital, and John Thiessen’s Vertex One Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Colony Capital Inc (NYSE:CLNY). We will take a look at Black Stone Minerals LP (NYSE:BSM), Louisiana-Pacific Corporation (NYSE:LPX), CVB Financial Corp. (NASDAQ:CVBF), and Gates Industrial Corporation plc (NYSE:GTES). All of these stocks’ market caps are closest to CLNY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BSM 7 7850 0
LPX 31 531921 4
CVBF 12 43719 0
GTES 14 50130 1
Average 16 158405 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $420 million in CLNY’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 7 bullish hedge fund positions. Colony Capital Inc (NYSE:CLNY) 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 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 CLNY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLNY were disappointed as the stock returned -18.9% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.

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