Last year'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 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Brookfield Property Partners LP (NASDAQ:BPY) changed during the first quarter.
Brookfield Property Partners LP (NASDAQ:BPY) has seen an increase in enthusiasm from smart money lately. Our calculations also showed that BPY 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.
Why do we pay any attention at all to hedge fund sentiment? 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_673972" align="aligncenter" width="473"] Blair Levinsky of Waratah Capital Advisors[/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. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the key hedge fund action surrounding Brookfield Property Partners LP (NASDAQ:BPY).
What does smart money think about Brookfield Property Partners LP (NASDAQ:BPY)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in BPY a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the most valuable position in Brookfield Property Partners LP (NASDAQ:BPY). Renaissance Technologies has a $15.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Forward Management, led by J. Alan Reid, Jr., holding a $8.8 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain John Thiessen's Vertex One Asset Management, Paul Marshall and Ian Wace's Marshall Wace and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Forward Management allocated the biggest weight to Brookfield Property Partners LP (NASDAQ:BPY), around 1.34% of its 13F portfolio. Vertex One Asset Management is also relatively very bullish on the stock, designating 1.28 percent of its 13F equity portfolio to BPY.
As industrywide interest jumped, some big names were leading the bulls' herd. Marshall Wace, managed by Paul Marshall and Ian Wace, created the most outsized position in Brookfield Property Partners LP (NASDAQ:BPY). Marshall Wace had $1.5 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also made a $0.5 million investment in the stock during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Brookfield Property Partners LP (NASDAQ:BPY) but similarly valued. We will take a look at Santander Consumer USA Holdings Inc (NYSE:SC), HollyFrontier Corporation (NYSE:HFC), Kimco Realty Corp (NYSE:KIM), and AGNC Investment Corp. (NASDAQ:AGNC). This group of stocks' market valuations are similar to BPY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SC,23,795446,-3 HFC,27,544455,2 KIM,11,100029,-8 AGNC,15,126937,-8 Average,19,391717,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $392 million. That figure was $32 million in BPY's case. HollyFrontier Corporation (NYSE:HFC) is the most popular stock in this table. On the other hand Kimco Realty Corp (NYSE:KIM) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Brookfield Property Partners LP (NASDAQ:BPY) is even less popular than KIM. Hedge funds dodged a bullet by taking a bearish stance towards BPY. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BPY wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BPY investors were disappointed as the stock returned -4.5% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.