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Hedge Funds Are Dumping Brandywine Realty Trust (BDN)

Debasis Saha

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtBrandywine Realty Trust (NYSE:BDN) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Brandywine Realty Trust (NYSE:BDN) has seen a decrease in enthusiasm from smart money lately. Our calculations also showed that BDN 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.

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 58 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_673876" align="aligncenter" width="400"] John Overdeck of Two Sigma Advisors[/caption]

John Overdeck of Two Sigma

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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 we're going to take a glance at the fresh hedge fund action encompassing Brandywine Realty Trust (NYSE:BDN).

What does smart money think about Brandywine Realty Trust (NYSE:BDN)?

At Q1's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -39% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in BDN a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BDN A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Brandywine Realty Trust (NYSE:BDN), worth close to $10.5 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position AlphaCrest Capital Management allocated the biggest weight to Brandywine Realty Trust (NYSE:BDN), around 0.12% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to BDN.

Due to the fact that Brandywine Realty Trust (NYSE:BDN) has experienced bearish sentiment from the smart money, it's easy to see that there was a specific group of hedgies who sold off their positions entirely last quarter. Intriguingly, Eduardo Abush's Waterfront Capital Partners sold off the largest investment of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $24.4 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund sold off about $11.3 million worth. These transactions are important to note, as total hedge fund interest was cut by 7 funds last quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Brandywine Realty Trust (NYSE:BDN) but similarly valued. These stocks are Advanced Energy Industries, Inc. (NASDAQ:AEIS), Casella Waste Systems Inc. (NASDAQ:CWST), Dicks Sporting Goods Inc (NYSE:DKS), and Compania de Minas Buenaventura SA (NYSE:BVN). This group of stocks' market valuations match BDN's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEIS,14,58741,-6 CWST,16,147998,6 DKS,27,180902,1 BVN,9,55975,-4 Average,16.5,110904,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $24 million in BDN's case. Dicks Sporting Goods Inc (NYSE:DKS) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura SA (NYSE:BVN) is the least popular one with only 9 bullish hedge fund positions. Brandywine Realty Trust (NYSE:BDN) 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately BDN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BDN investors were disappointed as the stock returned 5.7% 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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