The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Corporate Office Properties Trust (NYSE:OFC) and determine whether the smart money was really smart about this stock.
Is Corporate Office Properties Trust (NYSE:OFC) a sound investment today? Money managers were becoming hopeful. The number of bullish hedge fund bets increased by 3 recently. Corporate Office Properties Trust (NYSE:OFC) was in 20 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. Our calculations also showed that OFC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stuart Zimmer of Zimmer Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we're going to go over the fresh hedge fund action surrounding Corporate Office Properties Trust (NYSE:OFC).
How have hedgies been trading Corporate Office Properties Trust (NYSE:OFC)?
At second quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OFC over the last 20 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Corporate Office Properties Trust (NYSE:OFC) was held by Citadel Investment Group, which reported holding $53.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $49.8 million position. Other investors bullish on the company included V3 Capital, Zimmer Partners, and Millennium Management. In terms of the portfolio weights assigned to each position V3 Capital allocated the biggest weight to Corporate Office Properties Trust (NYSE:OFC), around 6.53% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to OFC.
Now, key hedge funds were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, assembled the most outsized position in Corporate Office Properties Trust (NYSE:OFC). Zimmer Partners had $22.2 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $4.9 million position during the quarter. The other funds with new positions in the stock are Charles Davidson and Joseph Jacobs's Wexford Capital, Donald Sussman's Paloma Partners, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Corporate Office Properties Trust (NYSE:OFC) but similarly valued. These stocks are Blackbaud, Inc. (NASDAQ:BLKB), ALLETE Inc (NYSE:ALE), AAON, Inc. (NASDAQ:AAON), Acacia Communications, Inc. (NASDAQ:ACIA), Cimarex Energy Co (NYSE:XEC), Navistar International Corp (NYSE:NAV), and STAAR Surgical Company (NASDAQ:STAA). This group of stocks' market values resemble OFC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLKB,19,95711,-3 ALE,25,119344,7 AAON,15,26745,4 ACIA,34,959611,12 XEC,39,556800,4 NAV,33,1245849,-3 STAA,20,920886,-1 Average,26.4,560707,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $561 million. That figure was $209 million in OFC's case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 15 bullish hedge fund positions. Corporate Office Properties Trust (NYSE:OFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OFC is 34.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately OFC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OFC investors were disappointed as the stock returned -5.3% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.