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Do Hedge Funds Love Brookfield Property Partners LP (BPY)?

Abigail Fisher

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Brookfield Property Partners LP (NASDAQ:BPY) based on that data.

Is Brookfield Property Partners LP (NASDAQ:BPY) a splendid investment today? The best stock pickers are selling. The number of long hedge fund bets went down by 1 in recent months. Our calculations also showed that BPY 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). BPY was in 7 hedge funds' portfolios at the end of March. There were 8 hedge funds in our database with BPY holdings at the end of the previous quarter. 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 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_337897" align="aligncenter" width="396"] Alan Reid of Forward Management[/caption]

Alan Reid Forward Management

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 stocks recommended/scorned by legendary Bill Miller. 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 we're going to take a look at the new hedge fund action regarding Brookfield Property Partners LP (NASDAQ:BPY).

How are hedge funds trading Brookfield Property Partners LP (NASDAQ:BPY)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BPY over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

The largest stake in Brookfield Property Partners LP (NASDAQ:BPY) was held by Arrowstreet Capital, which reported holding $23.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.4 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and Forward Management. In terms of the portfolio weights assigned to each position Forward Management allocated the biggest weight to Brookfield Property Partners LP (NASDAQ:BPY), around 0.57% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to BPY.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Neo Ivy Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified BPY as a viable investment and initiated a position in the stock.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Brookfield Property Partners LP (NASDAQ:BPY) but similarly valued. These stocks are Bilibili Inc. (NASDAQ:BILI), United Rentals, Inc. (NYSE:URI), Sarepta Therapeutics Inc (NASDAQ:SRPT), and Brookfield Renewable Partners L.P. (NYSE:BEP). All of these stocks' market caps resemble BPY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BILI,24,731095,1 URI,43,752405,-11 SRPT,33,905750,-9 BEP,3,18840,-1 Average,25.75,602023,-5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $602 million. That figure was $43 million in BPY's case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand Brookfield Renewable Partners L.P. (NYSE:BEP) is the least popular one with only 3 bullish hedge fund positions. Brookfield Property Partners LP (NASDAQ:BPY) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on BPY as the stock returned 53.7% during the second quarter and outperformed the market by an even larger margin.

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

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