Is W.P. Carey Inc. (NYSE:WPC) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
W.P. Carey Inc. (NYSE:WPC) has seen an increase in hedge fund sentiment lately. WPC was in 16 hedge funds' portfolios at the end of June. There were 13 hedge funds in our database with WPC holdings at the end of the previous quarter. Our calculations also showed that WPC isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the latest hedge fund action regarding W.P. Carey Inc. (NYSE:WPC).
How have hedgies been trading W.P. Carey Inc. (NYSE:WPC)?
Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the first quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in WPC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Two Sigma Advisors was the largest shareholder of W.P. Carey Inc. (NYSE:WPC), with a stake worth $8.8 million reported as of the end of March. Trailing Two Sigma Advisors was Shoals Capital Management, which amassed a stake valued at $8.1 million. PEAK6 Capital Management, Citadel Investment Group, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were breaking ground themselves. GAMCO Investors, managed by Mario Gabelli, created the biggest position in W.P. Carey Inc. (NYSE:WPC). GAMCO Investors had $2 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also initiated a $0.8 million position during the quarter. The following funds were also among the new WPC investors: Steve Cohen's Point72 Asset Management and Claes Fornell's CSat Investment Advisory.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as W.P. Carey Inc. (NYSE:WPC) but similarly valued. These stocks are TransUnion (NYSE:TRU), Mid-America Apartment Communities, Inc. (NYSE:MAA), Extra Space Storage, Inc. (NYSE:EXR), and Symantec Corporation (NASDAQ:SYMC). This group of stocks' market valuations are closest to WPC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRU,30,1002765,1 MAA,13,292955,-8 EXR,20,184908,3 SYMC,35,1342024,6 Average,24.5,705663,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $706 million. That figure was $42 million in WPC's case. Symantec Corporation (NASDAQ:SYMC) is the most popular stock in this table. On the other hand Mid-America Apartment Communities, Inc. (NYSE:MAA) is the least popular one with only 13 bullish hedge fund positions. W.P. Carey Inc. (NYSE:WPC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on WPC as the stock returned 11.5% during the same time frame and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.