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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 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 First Industrial Realty Trust, Inc. (NYSE:FR).
Is FR stock a buy? Hedge fund interest in First Industrial Realty Trust, Inc. (NYSE:FR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Texas Roadhouse Inc (NASDAQ:TXRH), MP Materials Corp. (NYSE:MP), and Toll Brothers Inc (NYSE:TOL) to gather more data points.
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 124 percentage points since March 2017 (see the details here).
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x 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 we're going to take a peek at the new hedge fund action surrounding First Industrial Realty Trust, Inc. (NYSE:FR).
Do Hedge Funds Think FR Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the third quarter of 2020. On the other hand, there were a total of 19 hedge funds with a bullish position in FR a year ago. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John Khoury's Long Pond Capital has the most valuable position in First Industrial Realty Trust, Inc. (NYSE:FR), worth close to $59.5 million, comprising 2% of its total 13F portfolio. On Long Pond Capital's heels is Millennium Management, led by Israel Englander, holding a $52.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Noam Gottesman's GLG Partners, Eduardo Abush's Waterfront Capital Partners and Dmitry Balyasny's Balyasny Asset Management. 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 5.51% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 5.07 percent of its 13F equity portfolio to FR.
Judging by the fact that First Industrial Realty Trust, Inc. (NYSE:FR) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there was a specific group of hedgies that decided to sell off their full holdings by the end of the fourth quarter. At the top of the heap, Stuart J. Zimmer's Zimmer Partners dumped the largest position of the 750 funds followed by Insider Monkey, totaling an estimated $46.8 million in stock. Ken Heebner's fund, Capital Growth Management, also dropped its stock, about $19.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as First Industrial Realty Trust, Inc. (NYSE:FR) but similarly valued. These stocks are Texas Roadhouse Inc (NASDAQ:TXRH), MP Materials Corp. (NYSE:MP), Toll Brothers Inc (NYSE:TOL), FireEye Inc (NASDAQ:FEYE), Tenable Holdings, Inc. (NASDAQ:TENB), Envista Holdings Corporation (NYSE:NVST), and Enel Chile S.A. (NYSE:ENIC). This group of stocks' market valuations are closest to FR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TXRH,28,528432,6 MP,32,2744864,32 TOL,34,579654,-5 FEYE,31,314317,3 TENB,39,901500,9 NVST,33,801088,13 ENIC,7,22302,3 Average,29.1,841737,8.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $842 million. That figure was $381 million in FR's case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 7 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 60.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on FR as the stock returned 16.8% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.