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Is Federal Realty Investment Trust (FRT) A Good Stock To Buy?

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·5 min read
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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Federal Realty Investment Trust (NYSE:FRT).

Is FRT a good stock to buy? Federal Realty Investment Trust (NYSE:FRT) has seen an increase in enthusiasm from smart money of late. Federal Realty Investment Trust (NYSE:FRT) was in 21 hedge funds' portfolios at the end of September. The all time high for this statistic is 26. There were 16 hedge funds in our database with FRT positions at the end of the second quarter. Our calculations also showed that FRT isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to take a look at the latest hedge fund action encompassing Federal Realty Investment Trust (NYSE:FRT).

Do Hedge Funds Think FRT Is A Good Stock To Buy Now?

At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards FRT over the last 25 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FRT A Good Stock To Buy?
Is FRT A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Eduardo Abush's Waterfront Capital Partners has the largest position in Federal Realty Investment Trust (NYSE:FRT), worth close to $71.4 million, accounting for 5% of its total 13F portfolio. Coming in second is Ken Heebner of Capital Growth Management, with a $18.9 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Renaissance Technologies, Anand Parekh's Alyeska Investment Group and Dmitry Balyasny's Balyasny Asset Management. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Federal Realty Investment Trust (NYSE:FRT), around 5.03% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, dishing out 1.73 percent of its 13F equity portfolio to FRT.

As aggregate interest increased, key money managers have jumped into Federal Realty Investment Trust (NYSE:FRT) headfirst. Renaissance Technologies, assembled the largest position in Federal Realty Investment Trust (NYSE:FRT). Renaissance Technologies had $13.2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $6 million position during the quarter. The following funds were also among the new FRT investors: Stuart J. Zimmer's Zimmer Partners, Paul Marshall and Ian Wace's Marshall Wace LLP, and Peter Algert's Algert Global.

Let's check out hedge fund activity in other stocks similar to Federal Realty Investment Trust (NYSE:FRT). These stocks are Credit Acceptance Corp. (NASDAQ:CACC), Jefferies Financial Group Inc. (NYSE:JEF), Alcoa Corporation (NYSE:AA), Mirati Therapeutics, Inc. (NASDAQ:MRTX), West Fraser Timber Co. Ltd. (NYSE:WFG), XPO Logistics Inc (NYSE:XPO), and Tempur Sealy International Inc. (NYSE:TPX). This group of stocks' market valuations match FRT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CACC,25,854969,5 JEF,37,684099,8 AA,44,1746130,0 MRTX,46,2796323,-9 WFG,22,513697,-3 XPO,49,1833910,-8 TPX,37,1299293,2 Average,37.1,1389774,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.1 hedge funds with bullish positions and the average amount invested in these stocks was $1390 million. That figure was $166 million in FRT's case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand West Fraser Timber Co. Ltd. (NYSE:WFG) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Federal Realty Investment Trust (NYSE:FRT) is even less popular than WFG. Our overall hedge fund sentiment score for FRT is 34.2. 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 clearly dropped the ball on FRT as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on FRT as the stock returned 16.4% since Q3 (through December 31st) and outperformed the market by an even larger margin.

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