The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Cogent Communications Holdings Inc. (NASDAQ:CCOI).
Cogent Communications Holdings Inc. (NASDAQ:CCOI) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that CCOI 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.
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 S&P 500 ETFs by more than 58 percentage points since March 2017 (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 stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the fresh hedge fund action encompassing Cogent Communications Holdings Inc. (NASDAQ:CCOI).
Hedge fund activity in Cogent Communications Holdings Inc. (NASDAQ:CCOI)
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in CCOI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Cogent Communications Holdings Inc. (NASDAQ:CCOI), which was worth $292.4 million at the end of the third quarter. On the second spot was MIG Capital which amassed $40.3 million worth of shares. Zimmer Partners, GLG Partners, and Intrinsic Edge Capital 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 MIG Capital allocated the biggest weight to Cogent Communications Holdings Inc. (NASDAQ:CCOI), around 4.74% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 2.11 percent of its 13F equity portfolio to CCOI.
Consequently, key money managers have jumped into Cogent Communications Holdings Inc. (NASDAQ:CCOI) headfirst. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the biggest position in Cogent Communications Holdings Inc. (NASDAQ:CCOI). SG Capital Management had $4.2 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Lee Ainslie’s Maverick Capital, and Bruce Kovner’s Caxton Associates LP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cogent Communications Holdings Inc. (NASDAQ:CCOI) but similarly valued. We will take a look at Tetra Tech, Inc. (NASDAQ:TTEK), Plains All American Pipeline, L.P. (NYSE:PAA), Allison Transmission Holdings Inc (NYSE:ALSN), and Cirrus Logic, Inc. (NASDAQ:CRUS). This group of stocks’ market valuations match CCOI’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 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $454 million in CCOI’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 8 bullish hedge fund positions. Cogent Communications Holdings Inc. (NASDAQ:CCOI) 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately CCOI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CCOI were disappointed as the stock returned -5.8% 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.