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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought CBOE Global Markets Inc (NASDAQ:CBOE) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
CBOE Global Markets Inc (NASDAQ:CBOE) has seen a decrease in enthusiasm from smart money lately. CBOE Global Markets Inc (NASDAQ:CBOE) was in 32 hedge funds' portfolios at the end of June. The all time high for this statistics is 38. There were 38 hedge funds in our database with CBOE positions at the end of the first quarter. Our calculations also showed that CBOE isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's go over the fresh hedge fund action surrounding CBOE Global Markets Inc (NASDAQ:CBOE).
What have hedge funds been doing with CBOE Global Markets Inc (NASDAQ:CBOE)?
At the end of June, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in CBOE a year ago. So, let's see 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 CBOE Global Markets Inc (NASDAQ:CBOE), which was worth $385.2 million at the end of the third quarter. On the second spot was D E Shaw which amassed $141.6 million worth of shares. Echo Street Capital Management, GLG Partners, and Horizon Asset Management 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 Truvvo Partners allocated the biggest weight to CBOE Global Markets Inc (NASDAQ:CBOE), around 11% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 1.64 percent of its 13F equity portfolio to CBOE.
Since CBOE Global Markets Inc (NASDAQ:CBOE) has experienced falling interest from hedge fund managers, it's easy to see that there is a sect of money managers that decided to sell off their full holdings by the end of the second quarter. Interestingly, Steve Cohen's Point72 Asset Management dropped the largest position of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $14.3 million in stock. Angela Aldrich's fund, Bayberry Capital Partners, also dumped its stock, about $8.4 million worth. These moves are interesting, as total hedge fund interest was cut by 6 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as CBOE Global Markets Inc (NASDAQ:CBOE) but similarly valued. These stocks are Huazhu Group Limited (NASDAQ:HTHT), Icahn Enterprises LP (NASDAQ:IEP), Franklin Resources, Inc. (NYSE:BEN), Essential Utilities Inc (NYSE:WTRG), Cincinnati Financial Corporation (NASDAQ:CINF), Hasbro, Inc. (NASDAQ:HAS), and Cognex Corporation (NASDAQ:CGNX). This group of stocks' market valuations are similar to CBOE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HTHT,17,381209,0 IEP,3,9994902,0 BEN,36,410167,4 WTRG,15,536751,-8 CINF,20,604548,-11 HAS,23,149844,-2 CGNX,26,266923,10 Average,20,1763478,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $1763 million. That figure was $840 million in CBOE's case. Franklin Resources, Inc. (NYSE:BEN) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 3 bullish hedge fund positions. CBOE Global Markets Inc (NASDAQ:CBOE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBOE is 68.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately CBOE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CBOE were disappointed as the stock returned -3.2% 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.