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Here’s What Hedge Funds Think About CubeSmart (CUBE)

Reymerlyn Martin

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about CubeSmart (NYSE:CUBE) in this article.

Is CubeSmart (NYSE:CUBE) a buy here? Investors who are in the know are betting on the stock. The number of bullish hedge fund positions moved up by 2 recently. Our calculations also showed that CUBE isn't among the 30 most popular stocks among hedge funds.

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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

MILLENNIUM MANAGEMENT

We're going to take a glance at the latest hedge fund action surrounding CubeSmart (NYSE:CUBE).

How are hedge funds trading CubeSmart (NYSE:CUBE)?

At Q4's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in CUBE a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CUBE_apr2019

Among these funds, AEW Capital Management held the most valuable stake in CubeSmart (NYSE:CUBE), which was worth $94.8 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $88.6 million worth of shares. Moreover, Millennium Management, Arrowstreet Capital, and Renaissance Technologies were also bullish on CubeSmart (NYSE:CUBE), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Snow Park Capital Partners, managed by Jeffrey Pierce, assembled the most outsized position in CubeSmart (NYSE:CUBE). Snow Park Capital Partners had $1.1 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also initiated a $0.9 million position during the quarter. The other funds with brand new CUBE positions are David Costen Haley's HBK Investments, Matthew Hulsizer's PEAK6 Capital Management, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as CubeSmart (NYSE:CUBE) but similarly valued. These stocks are Carlyle Group LP (NASDAQ:CG), BOK Financial Corporation (NASDAQ:BOKF), Ternium S.A. (NYSE:TX), and Arris International plc (NASDAQ:ARRS). This group of stocks' market values match CUBE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CG,10,112818,0 BOKF,19,219708,3 TX,12,101262,-2 ARRS,39,1059053,16 Average,20,373210,4.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $373 million. That figure was $440 million in CUBE's case. Arris International plc (NASDAQ:ARRS) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 10 bullish hedge fund positions. CubeSmart (NYSE:CUBE) 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 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately CUBE wasn't in this group. Hedge funds that bet on CUBE were disappointed as the stock returned 12% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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