Is Cushman & Wakefield plc (NYSE:CWK) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Cushman & Wakefield plc (NYSE:CWK) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. Our calculations also showed that CWK isn’t among the 30 most popular stocks among hedge funds (view the video below).
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.
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 review the fresh hedge fund action encompassing Cushman & Wakefield plc (NYSE:CWK).
What does smart money think about Cushman & Wakefield plc (NYSE:CWK)?
At Q2’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -46% from the first quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in CWK a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Lakewood Capital Management was the largest shareholder of Cushman & Wakefield plc (NYSE:CWK), with a stake worth $57.9 million reported as of the end of March. Trailing Lakewood Capital Management was Citadel Investment Group, which amassed a stake valued at $50.9 million. Land & Buildings Investment Management, Millennium Management, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Cushman & Wakefield plc (NYSE:CWK) has experienced declining sentiment from the smart money, we can see that there lies a certain “tier” of fund managers that elected to cut their entire stakes by the end of the second quarter. At the top of the heap, Ken Heebner’s Capital Growth Management dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $36.8 million in stock. Stuart J. Zimmer’s fund, Zimmer Partners, also cut its stock, about $15.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 12 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cushman & Wakefield plc (NYSE:CWK) but similarly valued. These stocks are Mercury Systems Inc (NASDAQ:MRCY), Lazard Ltd (NYSE:LAZ), RLI Corp. (NYSE:RLI), and EQT Corporation (NYSE:EQT). This group of stocks’ market valuations are similar to CWK’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $436 million. That figure was $159 million in CWK’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Cushman & Wakefield plc (NYSE:CWK) is even less popular than RLI. 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 CWK, though not to the same extent, as the stock returned 3.6% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.