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In this article you are going to find out whether hedge funds think National Retail Properties, Inc. (NYSE:NNN) 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.
Is National Retail Properties, Inc. (NYSE:NNN) the right pick for your portfolio? Investors who are in the know were becoming hopeful. The number of bullish hedge fund positions rose by 8 recently. National Retail Properties, Inc. (NYSE:NNN) was in 22 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that NNN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Clint Carlson of Carlson Capital
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 go over the fresh hedge fund action encompassing National Retail Properties, Inc. (NYSE:NNN).
Do Hedge Funds Think NNN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 57% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in NNN a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, V3 Capital held the most valuable stake in National Retail Properties, Inc. (NYSE:NNN), which was worth $57.5 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $56.9 million worth of shares. Long Pond Capital, Zimmer Partners, and Carlson Capital 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 V3 Capital allocated the biggest weight to National Retail Properties, Inc. (NYSE:NNN), around 10.67% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, dishing out 1.93 percent of its 13F equity portfolio to NNN.
As aggregate interest increased, some big names were leading the bulls' herd. Zimmer Partners, managed by Stuart J. Zimmer, created the largest position in National Retail Properties, Inc. (NYSE:NNN). Zimmer Partners had $27 million invested in the company at the end of the quarter. Matthew Crandall Gilman's Hill Winds Capital also made a $3.5 million investment in the stock during the quarter. The other funds with brand new NNN positions are Anand Parekh's Alyeska Investment Group, Ray Dalio's Bridgewater Associates, and Lawrence Raiman's LDR Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as National Retail Properties, Inc. (NYSE:NNN) but similarly valued. We will take a look at Anaplan, Inc. (NYSE:PLAN), Fate Therapeutics Inc (NASDAQ:FATE), Fastly, Inc. (NYSE:FSLY), Performance Food Group Company (NYSE:PFGC), Capri Holdings Limited (NYSE:CPRI), AutoNation, Inc. (NYSE:AN), and Western Midstream Partners, LP (NYSE:WES). This group of stocks' market values match NNN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLAN,55,2367556,-8 FATE,39,2634993,5 FSLY,26,1323528,-6 PFGC,18,330563,-4 CPRI,47,909126,5 AN,24,585168,1 WES,8,127464,-2 Average,31,1182628,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1183 million. That figure was $290 million in NNN's case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. National Retail Properties, Inc. (NYSE:NNN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NNN is 53.6. 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 beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on NNN, though not to the same extent, as the stock returned 11.2% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.