We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Cision Ltd. (NYSE:CISN).
Cision Ltd. (NYSE:CISN) has seen an increase in support from the world's most elite money managers recently. 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 below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30633" align="aligncenter" width="474"] Alan Fournier for Pennant Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action encompassing Cision Ltd. (NYSE:CISN).
What does smart money think about Cision Ltd. (NYSE:CISN)?
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CISN over the last 17 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Cardinal Capital was the largest shareholder of Cision Ltd. (NYSE:CISN), with a stake worth $23.1 million reported as of the end of September. Trailing Cardinal Capital was Rubric Capital Management, which amassed a stake valued at $20.2 million. Pennant Capital Management, North Peak Capital, and Spitfire Capital 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 Spitfire Capital allocated the biggest weight to Cision Ltd. (NYSE:CISN), around 5.48% of its portfolio. Pennant Capital Management is also relatively very bullish on the stock, designating 4.06 percent of its 13F equity portfolio to CISN.
As aggregate interest increased, some big names have been driving this bullishness. North Peak Capital, managed by Michael Kahan and Jeremy Kahan, created the biggest 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 following funds were also among the new CISN investors: Paul Singer's Elliott Management, Marc Majzner's Clearline Capital, and Matthew Hulsizer's PEAK6 Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cision Ltd. (NYSE:CISN) but similarly valued. These stocks are Avaya Holdings Corp. (NYSE:AVYA), Lakeland Financial Corporation (NASDAQ:LKFN), Editas Medicine, Inc. (NASDAQ:EDIT), and Hudson Ltd. (NYSE:HUD). This group of stocks' market values resemble CISN's market value.
[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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CISN as the stock returned 29.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.