At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards First Industrial Realty Trust, Inc. (NYSE:FR).
Is First Industrial Realty Trust, Inc. (NYSE:FR) an exceptional investment now? The best stock pickers are turning bullish. The number of bullish hedge fund positions moved up by 5 lately. Our calculations also showed that FR 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). 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_256989" align="aligncenter" width="400"] Dmitry Balyasny of Balyasny Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 let's take a peek at the latest hedge fund action regarding First Industrial Realty Trust, Inc. (NYSE:FR).
How are hedge funds trading First Industrial Realty Trust, Inc. (NYSE:FR)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in FR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Long Pond Capital held the most valuable stake in First Industrial Realty Trust, Inc. (NYSE:FR), which was worth $75.7 million at the end of the third quarter. On the second spot was Waterfront Capital Partners which amassed $36.9 million worth of shares. Renaissance Technologies, Citadel Investment Group, and Balyasny Asset 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 First Industrial Realty Trust, Inc. (NYSE:FR), around 4.53% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, dishing out 3.88 percent of its 13F equity portfolio to FR.
As aggregate interest increased, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most valuable position in First Industrial Realty Trust, Inc. (NYSE:FR). Millennium Management had $7.7 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $6.5 million position during the quarter. The other funds with brand new FR positions are Jonathan Litt's Land & Buildings Investment Management, Daniel Johnson's Gillson Capital, and Benjamin A. Smith's Laurion Capital Management.
Let's now review hedge fund activity in other stocks similar to First Industrial Realty Trust, Inc. (NYSE:FR). These stocks are Planet Fitness Inc (NYSE:PLNT), Axon Enterprise, Inc. (NASDAQ:AAXN), Owens Corning (NYSE:OC), and Kimco Realty Corp (NYSE:KIM). This group of stocks' market values are similar to FR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLNT,44,804544,10 AAXN,26,413473,1 OC,30,398573,-17 KIM,22,55233,6 Average,30.5,417956,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $215 million in FR's case. Planet Fitness Inc (NYSE:PLNT) is the most popular stock in this table. On the other hand Kimco Realty Corp (NYSE:KIM) is the least popular one with only 22 bullish hedge fund positions. First Industrial Realty Trust, Inc. (NYSE:FR) 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 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 surpassed the market by 14.2 percentage points. Unfortunately FR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FR investors were disappointed as the stock returned 20.5% during the second 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.
Disclosure: None. This article was originally published at Insider Monkey.