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Should You Buy CBRE Group Inc (CBG)?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Hedge fund interest in CBRE Group Inc (NYSE:CBG) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Newell Rubbermaid Inc. (NYSE:NWL), Fastenal Company (NASDAQ:FAST), and Plains GP Holdings LP (NYSE:PAGP) to gather more data points.

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Keeping this in mind, we’re going to view the recent action encompassing CBRE Group Inc (NYSE:CBG).

What have hedge funds been doing with CBRE Group Inc (NYSE:CBG)?

At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the number one position in CBRE Group Inc (NYSE:CBG), worth close to $1.0025 billion, accounting for 5.8% of its total 13F portfolio. Coming in second is Blum Capital Partners, managed by Richard Blum, which holds a $125.9 million position; 67% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of D E Shaw, Ken Heebner’s Capital Growth Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Since CBRE Group Inc (NYSE:CBG) has faced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that slashed their entire stakes last quarter. At the top of the heap, Jim Simons’ Renaissance Technologies sold off the largest investment of the 700 funds monitored by Insider Monkey, worth close to $23.4 million in stock, and Andrew Sandler’s Sandler Capital Management was right behind this move, as the fund dumped about $6.4 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CBRE Group Inc (NYSE:CBG) but similarly valued. We will take a look at Newell Rubbermaid Inc. (NYSE:NWL), Fastenal Company (NASDAQ:FAST), Plains GP Holdings LP (NYSE:PAGP), and McCormick & Company, Incorporated (NYSE:MKC). All of these stocks’ market caps are closest to CBG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWL 27 468886 8
FAST 17 300642 -2
PAGP 27 758247 4
MKC 19 86917 2

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $404 million. That figure was $1663 million in CBG’s case. Newell Rubbermaid Inc. (NYSE:NWL) is the most popular stock in this table. On the other hand Fastenal Company (NASDAQ:FAST) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks CBRE Group Inc (NYSE:CBG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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