2018's fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 41.3% in 2019 and outperformed the S&P 500 ETF by more than 10 percentage points. In this article we will study how hedge fund sentiment towards Cision Ltd. (NYSE:CISN) changed during the third quarter and how the stock performed in comparison to hedge fund consensus stocks.
Cision Ltd. (NYSE:CISN) shareholders have witnessed an increase in activity from the world's largest hedge funds of late. Our calculations also showed that CISN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
Today there are many signals investors have at their disposal to appraise stocks. Two of the most under-the-radar signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a superb margin (see the details here).
[caption id="attachment_30633" align="aligncenter" width="590"] Alan Fournier of Pennant Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we're going to take a look at the fresh hedge fund action regarding Cision Ltd. (NYSE:CISN).
What have hedge funds been doing with Cision Ltd. (NYSE:CISN)?
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CISN over the last 17 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Cision Ltd. (NYSE:CISN) was held by Cardinal Capital, which reported holding $23.1 million worth of stock at the end of September. It was followed by Rubric Capital Management with a $20.2 million position. Other investors bullish on the company included Pennant Capital Management, North Peak Capital, and Spitfire Capital. In terms of the portfolio weights assigned to each position Spitfire Capital allocated the biggest weight to Cision Ltd. (NYSE:CISN), around 5.48% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, designating 4.06 percent of its 13F equity portfolio to CISN.
Consequently, key hedge funds were breaking ground themselves. North Peak Capital, managed by Michael Kahan and Jeremy Kahan, initiated the most outsized position in Cision Ltd. (NYSE:CISN). North Peak Capital had $8.4 million invested in the company at the end of the quarter. Charles Paquelet's Skylands Capital also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Singer's Elliott Management, Marc Majzner's Clearline Capital, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks similar to Cision Ltd. (NYSE:CISN). These stocks are Avaya Holdings Corp. (NYSE:AVYA), Lakeland Financial Corporation (NASDAQ:LKFN), Editas Medicine, Inc. (NASDAQ:EDIT), and Hudson Ltd. (NYSE:HUD). All of these stocks' market caps are similar to CISN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVYA,40,259286,-2 LKFN,10,20174,-1 EDIT,11,100575,-3 HUD,12,31637,0 Average,18.25,102918,-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 $103 million. That figure was $84 million in CISN's case. Avaya Holdings Corp. (NYSE:AVYA) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 10 bullish hedge fund positions. Cision Ltd. (NYSE:CISN) is not the most popular stock in this group but hedge fund interest is still above average. 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 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. Unfortunately CISN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CISN were disappointed as the stock returned -14.8% in 2019 and trailed 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 many of these stocks already outperformed the market so far this year. 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.