We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards City Office REIT Inc (NYSE:CIO), and what that likely means for the prospects of the company and its stock.
City Office REIT Inc (NYSE:CIO) investors should pay attention to an increase in hedge fund sentiment in recent months. There were 5 hedge funds in our database with CIO positions at the end of the second quarter, which had risen to 6 by the end of the third quarter. At the end of this article we will also compare CIO to other stocks including Lionbridge Technologies, Inc. (NASDAQ:LIOX), Novan Inc (NASDAQ:NOVN), and Aerohive Networks Inc (NYSE:HIVE) to get a better sense of its popularity.
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What have hedge funds been doing with City Office REIT Inc (NYSE:CIO)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 20% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in CIO heading into this year, though that had skyrocketed to 11 by the end of Q1. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Philip Hempleman’s Ardsley Partners holds the most valuable position in City Office REIT Inc (NYSE:CIO). Ardsley Partners has a $10.2 million position in the stock, comprising 1.6% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, holding a $7.3 million position. Remaining hedge funds and institutional investors that hold long positions encompass Israel Englander’s Millennium Management, Amy Minella’s Cardinal Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.