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Hedge Funds Done Buying Plymouth Industrial REIT, Inc. (PLYM)

Asma UL Husna

In this article you are going to find out whether hedge funds think Plymouth Industrial REIT, Inc. (NYSE:PLYM) 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.

Hedge fund interest in Plymouth Industrial REIT, Inc. (NYSE:PLYM) shares was flat at the end of last quarter. This is usually a negative indicator. 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 CECO Environmental Corp. (NASDAQ:CECE), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), and Spero Therapeutics, Inc. (NASDAQ:SPRO) to gather more data points. Our calculations also showed that PLYM 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_746893" align="aligncenter" width="392"] Paul Marshall of Marshall Wace[/caption]

Paul Marshall Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a peek at the recent hedge fund action regarding Plymouth Industrial REIT, Inc. (NYSE:PLYM).

Hedge fund activity in Plymouth Industrial REIT, Inc. (NYSE:PLYM)

At Q1's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in PLYM over the last 18 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Plymouth Industrial REIT, Inc. (NYSE:PLYM), with a stake worth $6.5 million reported as of the end of September. Trailing Renaissance Technologies was LDR Capital, which amassed a stake valued at $4.4 million. Millennium Management, Two Sigma Advisors, and Winton Capital Management 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 LDR Capital allocated the biggest weight to Plymouth Industrial REIT, Inc. (NYSE:PLYM), around 7.55% of its 13F portfolio. Ellington is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to PLYM.

Since Plymouth Industrial REIT, Inc. (NYSE:PLYM) has witnessed falling interest from the smart money, logic holds that there lies a certain "tier" of hedgies who were dropping their entire stakes last quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management cut the biggest stake of the 750 funds watched by Insider Monkey, comprising an estimated $2 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also dumped its stock, about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks similar to Plymouth Industrial REIT, Inc. (NYSE:PLYM). These stocks are CECO Environmental Corp. (NASDAQ:CECE), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), Spero Therapeutics, Inc. (NASDAQ:SPRO), and U.S. Xpress Enterprises, Inc. (NYSE:USX). This group of stocks' market values resemble PLYM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CECE,7,29575,-2 GRIF,4,25050,1 SPRO,7,27260,0 USX,7,1063,1 Average,6.25,20737,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $15 million in PLYM's case. CECO Environmental Corp. (NASDAQ:CECE) is the most popular stock in this table. On the other hand Griffin Industrial Realty, Inc. (NASDAQ:GRIF) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Plymouth Industrial REIT, Inc. (NYSE:PLYM) is more popular among hedge funds. 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on PLYM as the stock returned 28.1% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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