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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. How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding CoreSite Realty Corp (NYSE:COR).
Is CoreSite Realty Corp (NYSE:COR) a worthy stock to buy now? The best stock pickers are getting more bullish. The number of long hedge fund bets went up by 4 lately. Our calculations also showed that COR 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).
Today there are a large number of formulas investors put to use to analyze publicly traded companies. A pair of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the S&P 500 by a significant margin (see the details here).
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David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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. With all of this in mind we're going to analyze the latest hedge fund action surrounding CoreSite Realty Corp (NYSE:COR).
Hedge fund activity in CoreSite Realty Corp (NYSE:COR)
At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards COR over the last 18 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in CoreSite Realty Corp (NYSE:COR). Renaissance Technologies has a $105.4 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $35.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Ken Fisher's Fisher Asset Management, Israel Englander's Millennium Management and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to CoreSite Realty Corp (NYSE:COR), around 2.99% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.23 percent of its 13F equity portfolio to COR.
Consequently, some big names have jumped into CoreSite Realty Corp (NYSE:COR) headfirst. D E Shaw, managed by D. E. Shaw, established the biggest position in CoreSite Realty Corp (NYSE:COR). D E Shaw had $3.3 million invested in the company at the end of the quarter. Parvinder Thiara's Athanor Capital also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new COR investors: Michael Gelband's ExodusPoint Capital, Matthew Hulsizer's PEAK6 Capital Management, and Ran Pang's Quantamental Technologies.
Let's now review hedge fund activity in other stocks similar to CoreSite Realty Corp (NYSE:COR). These stocks are NIO Inc. (NYSE:NIO), Transocean Ltd (NYSE:RIG), Cabot Microelectronics Corporation (NASDAQ:CCMP), and Stag Industrial Inc (NYSE:STAG). This group of stocks' market caps match COR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NIO,16,68386,3 RIG,26,615765,-13 CCMP,24,382670,7 STAG,18,126164,-6 Average,21,298246,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $255 million in COR's case. Transocean Ltd (NYSE:RIG) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 16 bullish hedge fund positions. CoreSite Realty Corp (NYSE:COR) is not the least popular stock in this group but hedge fund interest is still below average. 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 still beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on COR as the stock returned -8.9% during the same time period and outperformed the market by an even larger margin.
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.