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. We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Cohen & Steers, Inc. (NYSE:CNS).
Hedge fund interest in Cohen & Steers, Inc. (NYSE:CNS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CNS to other stocks including Ameris Bancorp (NASDAQ:ABCB), Penn National Gaming, Inc (NASDAQ:PENN), and PTC Therapeutics, Inc. (NASDAQ:PTCT) to get a better sense of its popularity.
To the average investor there are many indicators investors can use to value publicly traded companies. Two of the less known indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a healthy amount (see the details here).
[caption id="attachment_375529" align="aligncenter" width="399"] Mario Gabelli of GAMCO Investors[/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. Now we're going to take a look at the latest hedge fund action regarding Cohen & Steers, Inc. (NYSE:CNS).
How have hedgies been trading Cohen & Steers, Inc. (NYSE:CNS)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in CNS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in Cohen & Steers, Inc. (NYSE:CNS), which was worth $40.8 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $19.3 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and GLG Partners 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 Zebra Capital Management allocated the biggest weight to Cohen & Steers, Inc. (NYSE:CNS), around 1.04% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.33 percent of its 13F equity portfolio to CNS.
Since Cohen & Steers, Inc. (NYSE:CNS) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Renaissance Technologies dropped the biggest stake of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $2.5 million in stock. Steve Cohen's fund, Point72 Asset Management, also dropped its stock, about $0.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Cohen & Steers, Inc. (NYSE:CNS) but similarly valued. These stocks are Ameris Bancorp (NASDAQ:ABCB), Penn National Gaming, Inc (NASDAQ:PENN), PTC Therapeutics, Inc. (NASDAQ:PTCT), and The Chemours Company (NYSE:CC). All of these stocks' market caps match CNS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABCB,16,160287,0 PENN,27,131433,2 PTCT,34,605873,-2 CC,29,332478,-1 Average,26.5,307518,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $94 million in CNS's case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Cohen & Steers, Inc. (NYSE:CNS) is even less popular than ABCB. Hedge funds dodged a bullet by taking a bearish stance towards CNS. Our calculations showed that the top 20 most popular hedge fund stocks 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 managed to beat the market by 5.5 percentage points. Unfortunately CNS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CNS investors were disappointed as the stock returned -34% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1. 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.