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Is First Industrial Realty Trust, Inc. (FR) Going to Burn These Hedge Funds?

·5 min read

We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of First Industrial Realty Trust, Inc. (NYSE:FR) based on that data.

Is First Industrial Realty Trust, Inc. (NYSE:FR) a bargain? The smart money was cutting their exposure. The number of long hedge fund bets dropped by 6 lately. First Industrial Realty Trust, Inc. (NYSE:FR) was in 20 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that FR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. Now we're going to take a look at the key hedge fund action surrounding First Industrial Realty Trust, Inc. (NYSE:FR).

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

At the end of March, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FR over the last 23 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Long Pond Capital held the most valuable stake in First Industrial Realty Trust, Inc. (NYSE:FR), which was worth $150.5 million at the end of the fourth quarter. On the second spot was Waterfront Capital Partners which amassed $49.8 million worth of shares. Millennium Management, GLG Partners, and Two Sigma Advisors 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 Land & Buildings Investment Management allocated the biggest weight to First Industrial Realty Trust, Inc. (NYSE:FR), around 5.8% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, earmarking 5.14 percent of its 13F equity portfolio to FR.

Seeing as First Industrial Realty Trust, Inc. (NYSE:FR) has witnessed falling interest from the smart money, it's easy to see that there was a specific group of funds that elected to cut their entire stakes in the first quarter. Intriguingly, Daniel Johnson's Gillson Capital cut the biggest stake of all the hedgies followed by Insider Monkey, totaling close to $2.4 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dropped its stock, about $2.3 million worth. These transactions are important to note, as total hedge fund interest dropped by 6 funds in the first quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as First Industrial Realty Trust, Inc. (NYSE:FR) but similarly valued. We will take a look at Louisiana-Pacific Corporation (NYSE:LPX), Colfax Corporation (NYSE:CFX), New York Community Bancorp, Inc. (NYSE:NYCB), MSA Safety Incorporated (NYSE:MSA), Medpace Holdings, Inc. (NASDAQ:MEDP), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Agora, Inc. (NASDAQ:API). This group of stocks' market valuations are similar to FR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPX,30,771996,-11 CFX,49,1009256,13 NYCB,25,329163,0 MSA,17,29716,4 MEDP,21,265560,-4 IART,13,96207,0 API,17,739743,3 Average,24.6,463092,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $463 million. That figure was $417 million in FR's case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand Integra Lifesciences Holdings Corp (NASDAQ:IART) is the least popular one with only 13 bullish hedge fund positions. First Industrial Realty Trust, Inc. (NYSE:FR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FR is 28.7. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on FR as the stock returned 19.3% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.

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