At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Healthcare Trust Of America Inc (NYSE:HTA) was in 17 hedge funds' portfolios at the end of the fourth quarter of 2018. HTA investors should be aware of an increase in enthusiasm from smart money in recent months. There were 16 hedge funds in our database with HTA positions at the end of the previous quarter. Our calculations also showed that HTA isn't among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to take a look at the new hedge fund action encompassing Healthcare Trust Of America Inc (NYSE:HTA).
How are hedge funds trading Healthcare Trust Of America Inc (NYSE:HTA)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HTA over the last 14 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, AEW Capital Management was the largest shareholder of Healthcare Trust Of America Inc (NYSE:HTA), with a stake worth $80.9 million reported as of the end of September. Trailing AEW Capital Management was Renaissance Technologies, which amassed a stake valued at $62.7 million. Carlson Capital, Millennium Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names have been driving this bullishness. Carlson Capital, managed by Clint Carlson, initiated the most outsized position in Healthcare Trust Of America Inc (NYSE:HTA). Carlson Capital had $52.5 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $23.1 million investment in the stock during the quarter. The other funds with brand new HTA positions are Minhua Zhang's Weld Capital Management and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Healthcare Trust Of America Inc (NYSE:HTA) but similarly valued. These stocks are Park Hotels & Resorts Inc. (NYSE:PK), Helmerich & Payne, Inc. (NYSE:HP), H&R Block, Inc. (NYSE:HRB), and Phillips 66 Partners LP (NYSE:PSXP). This group of stocks' market caps are similar to HTA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PK,17,482603,2 HP,27,428815,-6 HRB,18,251709,0 PSXP,6,11676,2 Average,17,293701,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $394 million in HTA's case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 6 bullish hedge fund positions. Healthcare Trust Of America Inc (NYSE:HTA) 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 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately HTA wasn't in this group. Hedge funds that bet on HTA were disappointed as the stock returned 13.5% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.