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In this article you are going to find out whether hedge funds think CubeSmart (NYSE:CUBE) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is CUBE a good stock to buy now? CubeSmart (NYSE:CUBE) was in 18 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 27. CUBE has seen a decrease in hedge fund sentiment of late. There were 24 hedge funds in our database with CUBE holdings at the end of June. Our calculations also showed that CUBE isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are plenty of tools stock traders have at their disposal to analyze stocks. A pair of the most innovative tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a solid amount (see the details here).
Ric Dillon of Diamond Hill Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a look at the recent hedge fund action surrounding CubeSmart (NYSE:CUBE).
Do Hedge Funds Think CUBE Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CUBE over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CubeSmart (NYSE:CUBE) was held by Diamond Hill Capital, which reported holding $132 million worth of stock at the end of September. It was followed by Millennium Management with a $47.3 million position. Other investors bullish on the company included Balyasny Asset Management, Impax Asset Management, and Hill Winds Capital. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to CubeSmart (NYSE:CUBE), around 5.79% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 0.78 percent of its 13F equity portfolio to CUBE.
Due to the fact that CubeSmart (NYSE:CUBE) has faced declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Greg Poole's Echo Street Capital Management sold off the largest investment of the 750 funds tracked by Insider Monkey, worth an estimated $31 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also sold off its stock, about $5.5 million worth. These moves are important to note, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to CubeSmart (NYSE:CUBE). These stocks are American Airlines Group Inc (NASDAQ:AAL), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Herbalife Nutrition Ltd. (NYSE:HLF), Vroom, Inc. (NASDAQ:VRM), Deckers Outdoor Corp (NASDAQ:DECK), BanColombia S.A. (NYSE:CIB), and Toll Brothers Inc (NYSE:TOL). This group of stocks' market valuations are closest to CUBE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAL,37,208177,-10 MNTA,35,1256999,-7 HLF,36,2374897,0 VRM,34,399177,6 DECK,54,1096897,7 CIB,3,60943,-6 TOL,39,707443,0 Average,34,872076,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $872 million. That figure was $229 million in CUBE's case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 3 bullish hedge fund positions. CubeSmart (NYSE:CUBE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CUBE is 33.7. 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 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately CUBE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CUBE investors were disappointed as the stock returned 0.9% since the end of September (through 12/14) 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 2020.
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Disclosure: None. This article was originally published at Insider Monkey.