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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Eastgroup Properties Inc (NYSE:EGP) based on those filings.
Is EGP a good stock to buy now? Prominent investors were selling. The number of bullish hedge fund bets retreated by 4 in recent months. Eastgroup Properties Inc (NYSE:EGP) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 14. Our calculations also showed that EGP isn't among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Keeping this in mind let's take a glance at the key hedge fund action regarding Eastgroup Properties Inc (NYSE:EGP).
Do Hedge Funds Think EGP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in EGP 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.
More specifically, Capital Growth Management was the largest shareholder of Eastgroup Properties Inc (NYSE:EGP), with a stake worth $20.7 million reported as of the end of September. Trailing Capital Growth Management was Carlson Capital, which amassed a stake valued at $11.3 million. Hill Winds Capital, GLG Partners, and AQR Capital Management 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 Hill Winds Capital allocated the biggest weight to Eastgroup Properties Inc (NYSE:EGP), around 7.21% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, earmarking 2.16 percent of its 13F equity portfolio to EGP.
Judging by the fact that Eastgroup Properties Inc (NYSE:EGP) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of money managers who were dropping their positions entirely by the end of the third quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management sold off the biggest position of all the hedgies tracked by Insider Monkey, totaling about $12.1 million in stock, and Mark Coe's Intrinsic Edge Capital was right behind this move, as the fund said goodbye to about $9.5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Eastgroup Properties Inc (NYSE:EGP). These stocks are Ingredion Incorporated (NYSE:INGR), First Industrial Realty Trust, Inc. (NYSE:FR), Nielsen Holdings plc (NYSE:NLSN), CoreSite Realty Corp (NYSE:COR), Apartment Investment and Management Co. (NYSE:AIV), Nomad Foods Limited (NYSE:NOMD), and Oshkosh Corporation (NYSE:OSK). This group of stocks' market values are similar to EGP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INGR,23,243468,1 FR,26,418925,-4 NLSN,30,943619,-1 COR,19,163584,-2 AIV,25,484646,1 NOMD,31,381203,-3 OSK,29,203174,2 Average,26.1,405517,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $406 million. That figure was $52 million in EGP's case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand CoreSite Realty Corp (NYSE:COR) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Eastgroup Properties Inc (NYSE:EGP) is even less popular than COR. Our overall hedge fund sentiment score for EGP is 22.4. 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. Hedge funds dodged a bullet by taking a bearish stance towards EGP. 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 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately EGP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); EGP investors were disappointed as the stock returned 3.4% since the end of the third quarter (through 12/8) 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 2020.
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Disclosure: None. This article was originally published at Insider Monkey.