Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Cushman & Wakefield plc (NYSE:CWK) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Cushman & Wakefield plc (NYSE:CWK) the right pick for your portfolio? Investors who are in the know are taking an optimistic view. The number of long hedge fund bets moved up by 8 recently. Our calculations also showed that CWK isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are many metrics stock traders have at their disposal to value publicly traded companies. Some of the less utilized metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices by a very impressive margin (see the details here).
[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
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 this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind let's go over the recent hedge fund action encompassing Cushman & Wakefield plc (NYSE:CWK).
Hedge fund activity in Cushman & Wakefield plc (NYSE:CWK)
At the end of the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 80% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CWK over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cushman & Wakefield plc (NYSE:CWK) was held by Lakewood Capital Management, which reported holding $71.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $31.8 million position. Other investors bullish on the company included Zimmer Partners, Sunriver Management, and Land & Buildings Investment Management. In terms of the portfolio weights assigned to each position Sunriver Management allocated the biggest weight to Cushman & Wakefield plc (NYSE:CWK), around 3.33% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, dishing out 3.28 percent of its 13F equity portfolio to CWK.
As industrywide interest jumped, key money managers were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, assembled the biggest position in Cushman & Wakefield plc (NYSE:CWK). Zimmer Partners had $25.4 million invested in the company at the end of the quarter. Will Cook's Sunriver Management also made a $19 million investment in the stock during the quarter. The following funds were also among the new CWK investors: Michael Gelband's ExodusPoint Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Donald Sussman's Paloma Partners.
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 China Biologic Products Inc (NASDAQ:CBPO), Healthcare Realty Trust Inc (NYSE:HR), Pure Storage, Inc. (NYSE:PSTG), and Enstar Group Ltd. (NASDAQ:ESGR). This group of stocks' market caps are similar to CWK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBPO,19,562285,1 HR,12,51401,-1 PSTG,29,469978,-6 ESGR,13,440083,0 Average,18.25,380937,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $381 million. That figure was $216 million in CWK's case. Pure Storage, Inc. (NYSE:PSTG) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 12 bullish hedge fund positions. Cushman & Wakefield plc (NYSE:CWK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately CWK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CWK investors were disappointed as the stock returned -45.1% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.