The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Weingarten Realty Investors (NYSE:WRI) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Weingarten Realty Investors (NYSE:WRI) the right investment to pursue these days? The smart money was in a pessimistic mood. The number of bullish hedge fund positions decreased by 1 in recent months. Weingarten Realty Investors (NYSE:WRI) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. Our calculations also showed that WRI isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 56 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's take a look at the key hedge fund action regarding Weingarten Realty Investors (NYSE:WRI).
How are hedge funds trading Weingarten Realty Investors (NYSE:WRI)?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in WRI a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Weingarten Realty Investors (NYSE:WRI), with a stake worth $26.5 million reported as of the end of September. Trailing Citadel Investment Group was Land & Buildings Investment Management, which amassed a stake valued at $14.2 million. Echo Street Capital Management, Two Sigma Advisors, and D E Shaw 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 Land & Buildings Investment Management allocated the biggest weight to Weingarten Realty Investors (NYSE:WRI), around 3.48% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 0.89 percent of its 13F equity portfolio to WRI.
Due to the fact that Weingarten Realty Investors (NYSE:WRI) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of money managers that elected to cut their entire stakes in the second quarter. It's worth mentioning that Eduardo Abush's Waterfront Capital Partners cut the largest stake of all the hedgies tracked by Insider Monkey, valued at about $10 million in stock. Noam Gottesman's fund, GLG Partners, also sold off its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let's also examine hedge fund activity in other stocks similar to Weingarten Realty Investors (NYSE:WRI). These stocks are F.N.B. Corp (NYSE:FNB), Baozun Inc (NASDAQ:BZUN), ABM Industries, Inc. (NYSE:ABM), Applied Industrial Technologies Inc (NYSE:AIT), Builders FirstSource, Inc. (NASDAQ:BLDR), Kodiak Sciences Inc (NASDAQ:KOD), and J&J Snack Foods Corp. (NASDAQ:JJSF). This group of stocks' market values resemble WRI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FNB,24,68816,0 BZUN,15,70738,3 ABM,21,49636,3 AIT,15,29147,1 BLDR,32,456822,3 KOD,20,861824,8 JJSF,17,70981,0 Average,20.6,229709,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $87 million in WRI's case. Builders FirstSource, Inc. (NASDAQ:BLDR) is the most popular stock in this table. On the other hand Baozun Inc (NASDAQ:BZUN) is the least popular one with only 15 bullish hedge fund positions. Weingarten Realty Investors (NYSE:WRI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WRI is 42.9. 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. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately WRI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WRI investors were disappointed as the stock returned -9.5% in the third 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.