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Hedge Funds Aren’t Done Buying Equity Lifestyle Properties, Inc. (ELS)

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In this article you are going to find out whether hedge funds think Equity Lifestyle Properties, Inc. (NYSE:ELS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Equity Lifestyle Properties, Inc. (NYSE:ELS) investors should be aware of an increase in enthusiasm from smart money in recent months. ELS was in 31 hedge funds' portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with ELS holdings at the end of the previous quarter. Our calculations also showed that ELS isn't among the 30 most popular stocks among hedge funds (click for Q1 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.

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 51 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_745225" align="aligncenter" width="400"]

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a glance at the fresh hedge fund action encompassing Equity Lifestyle Properties, Inc. (NYSE:ELS).

How are hedge funds trading Equity Lifestyle Properties, Inc. (NYSE:ELS)?

At Q1's end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ELS over the last 18 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Is ELS A Good Stock To Buy?
Is ELS A Good Stock To Buy?

The largest stake in Equity Lifestyle Properties, Inc. (NYSE:ELS) was held by Renaissance Technologies, which reported holding $287.6 million worth of stock at the end of September. It was followed by Waratah Capital Advisors with a $48.2 million position. Other investors bullish on the company included Millennium Management, GLG Partners, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Waratah Capital Advisors allocated the biggest weight to Equity Lifestyle Properties, Inc. (NYSE:ELS), around 8.57% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, earmarking 6.45 percent of its 13F equity portfolio to ELS.

Now, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable position in Equity Lifestyle Properties, Inc. (NYSE:ELS). Balyasny Asset Management had $8.4 million invested in the company at the end of the quarter. Lawrence Raiman's LDR Capital also initiated a $3.7 million position during the quarter. The other funds with brand new ELS positions are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Minhua Zhang's Weld Capital Management, and Mark Coe's Intrinsic Edge Capital.

Let's also examine hedge fund activity in other stocks similar to Equity Lifestyle Properties, Inc. (NYSE:ELS). These stocks are DISH Network Corp. (NASDAQ:DISH), POSCO (NYSE:PKX), Vipshop Holdings Limited (NYSE:VIPS), and Burlington Stores Inc (NYSE:BURL). This group of stocks' market valuations resemble ELS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DISH,44,862996,3 PKX,11,40514,1 VIPS,30,553863,3 BURL,40,937584,4 Average,31.25,598739,2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $599 million. That figure was $452 million in ELS's case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 11 bullish hedge fund positions. Equity Lifestyle Properties, Inc. (NYSE:ELS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately ELS wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ELS investors were disappointed as the stock returned 8.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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