Is CoStar Group Inc (CSGP) Going to Burn These Hedge Funds?

CoStar Group Inc (NASDAQ:CSGP) was in 12 hedge funds’ portfolio at the end of March. CSGP has experienced an increase in hedge fund interest in recent months. There were 9 hedge funds in our database with CSGP holdings at the end of the previous quarter.

In the eyes of most traders, hedge funds are perceived as underperforming, outdated financial tools of the past. While there are greater than 8000 funds in operation at the moment, we choose to focus on the elite of this club, close to 450 funds. Most estimates calculate that this group controls most of the hedge fund industry’s total asset base, and by watching their top stock picks, we have brought to light a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

CoStar Group Inc (NASDAQ:CSGP)Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are a variety of stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the impressive potential of this strategy if piggybackers know what to do (learn more here).

With all of this in mind, let’s take a peek at the recent action encompassing CoStar Group Inc (NASDAQ:CSGP).

What does the smart money think about CoStar Group Inc (NASDAQ:CSGP)?

In preparation for this quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of 33% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Daruma Asset Management, managed by Mariko Gordon, holds the most valuable position in CoStar Group Inc (NASDAQ:CSGP). Daruma Asset Management has a $80.7 million position in the stock, comprising 4.1% of its 13F portfolio. Coming in second is Donald Chiboucis of Columbus Circle Investors, with a $76.9 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Joseph A. Jolson’s Harvest Capital Strategies, Jim Simons’s Renaissance Technologies and Richard Driehaus’s Driehaus Capital.

Now, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in CoStar Group Inc (NASDAQ:CSGP). Arrowstreet Capital had 3.2 million invested in the company at the end of the quarter. Ron Gutfleish’s Elm Ridge Capital also initiated a $1.1 million position during the quarter. The only other fund with a brand new CSGP position is Christopher Lord’s Criterion Capital.

How have insiders been trading CoStar Group Inc (NASDAQ:CSGP)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, CoStar Group Inc (NASDAQ:CSGP) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and CoStar Group Inc (NASDAQ:CSGP) is an important part of this process.

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