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We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Alexandria Real Estate Equities Inc (NYSE:ARE) based on that data.
Alexandria Real Estate Equities Inc (NYSE:ARE) was in 27 hedge funds' portfolios at the end of March. The all time high for this statistic is 29. ARE investors should be aware of an increase in hedge fund interest lately. There were 14 hedge funds in our database with ARE holdings at the end of December. Our calculations also showed that ARE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by 115 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.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to check out the key hedge fund action encompassing Alexandria Real Estate Equities Inc (NYSE:ARE).
Do Hedge Funds Think ARE Is A Good Stock To Buy Now?
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 93% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ARE over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Zimmer Partners was the largest shareholder of Alexandria Real Estate Equities Inc (NYSE:ARE), with a stake worth $214.4 million reported as of the end of March. Trailing Zimmer Partners was Millennium Management, which amassed a stake valued at $44.8 million. Citadel Investment Group, Waterfront Capital Partners, and Adage Capital Management 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 Waterfront Capital Partners allocated the biggest weight to Alexandria Real Estate Equities Inc (NYSE:ARE), around 3.69% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, dishing out 3.07 percent of its 13F equity portfolio to ARE.
As aggregate interest increased, some big names have been driving this bullishness. Waterfront Capital Partners, managed by Eduardo Abush, assembled the largest position in Alexandria Real Estate Equities Inc (NYSE:ARE). Waterfront Capital Partners had $40.7 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also initiated a $21 million position during the quarter. The other funds with brand new ARE positions are Paul Tudor Jones's Tudor Investment Corp, Michael Gelband's ExodusPoint Capital, and Stephen Mykijewycz's Masterton Capital Management.
Let's go over hedge fund activity in other stocks similar to Alexandria Real Estate Equities Inc (NYSE:ARE). We will take a look at FleetCor Technologies, Inc. (NYSE:FLT), Vulcan Materials Company (NYSE:VMC), EPAM Systems Inc (NYSE:EPAM), EXACT Sciences Corporation (NASDAQ:EXAS), Paycom Software Inc (NYSE:PAYC), Nokia Corporation (NYSE:NOK), and Edison International (NYSE:EIX). All of these stocks' market caps are closest to ARE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLT,39,1455035,-5 VMC,48,1317475,4 EPAM,24,424015,-8 EXAS,41,2408537,1 PAYC,46,969848,11 NOK,21,352915,2 EIX,35,1564442,5 Average,36.3,1213181,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1213 million. That figure was $434 million in ARE's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 21 bullish hedge fund positions. Alexandria Real Estate Equities Inc (NYSE:ARE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ARE is 49. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on ARE, though not to the same extent, as the stock returned 16.7% since the end of Q1 (through July 9th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.