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Healthcare Trust Of America Inc (HTA): Are Hedge Funds Right About This Stock?

Nina Todic

Is Healthcare Trust Of America Inc (NYSE:HTA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Healthcare Trust Of America Inc (NYSE:HTA) was in 13 hedge funds' portfolios at the end of the second quarter of 2019. HTA investors should pay attention to a decrease in hedge fund sentiment lately. There were 19 hedge funds in our database with HTA positions at the end of the previous quarter. Our calculations also showed that HTA isn't among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Clint Carlson, Carlson Capital

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the recent hedge fund action surrounding Healthcare Trust Of America Inc (NYSE:HTA).

How are hedge funds trading Healthcare Trust Of America Inc (NYSE:HTA)?

Heading into the third quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -32% from the first quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in HTA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with HTA Positions

According to Insider Monkey's hedge fund database, AEW Capital Management, managed by Jeffrey Furber, holds the biggest position in Healthcare Trust Of America Inc (NYSE:HTA). AEW Capital Management has a $82.6 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Greg Poole of Echo Street Capital Management, with a $78 million position; 1.4% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish contain Clint Carlson's Carlson Capital, Renaissance Technologies and Ken Griffin's Citadel Investment Group.

Judging by the fact that Healthcare Trust Of America Inc (NYSE:HTA) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that slashed their full holdings last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the biggest position of the 750 funds watched by Insider Monkey, worth about $12.9 million in stock, and Eduardo Abush's Waterfront Capital Partners was right behind this move, as the fund cut about $8.5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let's check out hedge fund activity in other stocks similar to Healthcare Trust Of America Inc (NYSE:HTA). We will take a look at The Howard Hughes Corporation (NYSE:HHC), Allison Transmission Holdings Inc (NYSE:ALSN), IAA, Inc. (NYSE:IAA), and LATAM Airlines Group S.A. (NYSE:LTM). This group of stocks' market values match HTA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HHC,26,551404,4 ALSN,25,894810,-3 IAA,42,908956,42 LTM,5,17929,-3 Average,24.5,593275,10 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $593 million. That figure was $406 million in HTA's case. IAA, Inc. (NYSE:IAA) is the most popular stock in this table. On the other hand LATAM Airlines Group S.A. (NYSE:LTM) is the least popular one with only 5 bullish hedge fund positions. Healthcare Trust Of America Inc (NYSE:HTA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on HTA as the stock returned 8.3% during the same time frame and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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