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 (see why hell is coming). 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 Eastgroup Properties Inc (NYSE:EGP) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Eastgroup Properties Inc (NYSE:EGP) was in 13 hedge funds' portfolios at the end of the first quarter of 2020. EGP shareholders have witnessed an increase in support from the world's most elite money managers recently. There were 10 hedge funds in our database with EGP holdings at the end of the previous quarter. Our calculations also showed that EGP 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.
If you'd ask most traders, hedge funds are perceived as worthless, outdated investment tools of the past. While there are over 8000 funds in operation at the moment, We choose to focus on the elite of this group, around 850 funds. These money managers shepherd most of the smart money's total asset base, and by tailing their unrivaled picks, Insider Monkey has determined various investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 most profitable companies in the world to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's check out the fresh hedge fund action surrounding Eastgroup Properties Inc (NYSE:EGP).
What have hedge funds been doing with Eastgroup Properties Inc (NYSE:EGP)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in EGP 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, Winton Capital Management was the largest shareholder of Eastgroup Properties Inc (NYSE:EGP), with a stake worth $8.8 million reported as of the end of September. Trailing Winton Capital Management was D E Shaw, which amassed a stake valued at $8.5 million. Balyasny Asset Management, AQR Capital Management, and Millennium 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 Quantinno Capital allocated the biggest weight to Eastgroup Properties Inc (NYSE:EGP), around 0.44% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.23 percent of its 13F equity portfolio to EGP.
As industrywide interest jumped, specific money managers were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, established the biggest position in Eastgroup Properties Inc (NYSE:EGP). D E Shaw had $8.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $2.3 million position during the quarter. The other funds with brand new EGP positions are Noam Gottesman's GLG Partners, Alec Litowitz and Ross Laser's Magnetar Capital, and Hoon Kim's Quantinno Capital.
Let's now review hedge fund activity in other stocks similar to Eastgroup Properties Inc (NYSE:EGP). We will take a look at Solaredge Technologies Inc (NASDAQ:SEDG), LogMeIn Inc (NASDAQ:LOGM), Anaplan, Inc. (NYSE:PLAN), and Xerox Holdings Corporation (NYSE:XRX). This group of stocks' market caps match EGP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEDG,27,264038,-1 LOGM,28,759486,-3 PLAN,51,1608189,-6 XRX,41,872768,2 Average,36.75,876120,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.75 hedge funds with bullish positions and the average amount invested in these stocks was $876 million. That figure was $36 million in EGP's case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Solaredge Technologies Inc (NASDAQ:SEDG) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Eastgroup Properties Inc (NYSE:EGP) is even less popular than SEDG. Hedge funds dodged a bullet by taking a bearish stance towards EGP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately EGP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); EGP investors were disappointed as the stock returned 12% during the second quarter (through June 25th) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.