The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. Stocks kept going up since then. In this article we look at how hedge funds traded Hudson Pacific Properties Inc (NYSE:HPP) and determine whether the smart money was really smart about this stock.
Hudson Pacific Properties Inc (NYSE:HPP) investors should pay attention to an increase in enthusiasm from smart money recently. Hudson Pacific Properties Inc (NYSE:HPP) was in 24 hedge funds' portfolios at the end of June. The all time high for this statistics is 27. Our calculations also showed that HPP 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.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 we're going to go over the latest hedge fund action encompassing Hudson Pacific Properties Inc (NYSE:HPP).
How have hedgies been trading Hudson Pacific Properties Inc (NYSE:HPP)?
At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in HPP a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Hudson Pacific Properties Inc (NYSE:HPP) was held by D1 Capital Partners, which reported holding $298.2 million worth of stock at the end of September. It was followed by Long Pond Capital with a $56.1 million position. Other investors bullish on the company included Angelo Gordon & Co, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Angelo Gordon & Co allocated the biggest weight to Hudson Pacific Properties Inc (NYSE:HPP), around 2.38% of its 13F portfolio. D1 Capital Partners is also relatively very bullish on the stock, setting aside 2.22 percent of its 13F equity portfolio to HPP.
As one would reasonably expect, specific money managers were breaking ground themselves. EMS Capital, managed by Edmond M. Safra, initiated the biggest position in Hudson Pacific Properties Inc (NYSE:HPP). EMS Capital had $8.8 million invested in the company at the end of the quarter. Andrew Kurita's Kettle Hill Capital Management also initiated a $8.6 million position during the quarter. The other funds with new positions in the stock are Daniel Johnson's Gillson Capital, David Harding's Winton Capital Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's go over hedge fund activity in other stocks similar to Hudson Pacific Properties Inc (NYSE:HPP). These stocks are The Hanover Insurance Group, Inc. (NYSE:THG), Global Blood Therapeutics Inc (NASDAQ:GBT), Cyberark Software Ltd (NASDAQ:CYBR), ICU Medical, Inc. (NASDAQ:ICUI), Wright Medical Group N.V. (NASDAQ:WMGI), Lattice Semiconductor Corporation (NASDAQ:LSCC), and Armstrong World Industries, Inc. (NYSE:AWI). This group of stocks' market valuations match HPP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position THG,25,133465,1 GBT,31,600038,8 CYBR,17,187436,3 ICUI,32,304412,7 WMGI,38,799962,1 LSCC,19,162880,-7 AWI,34,372376,14 Average,28,365796,3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $437 million in HPP's case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand Cyberark Software Ltd (NASDAQ:CYBR) is the least popular one with only 17 bullish hedge fund positions. Hudson Pacific Properties Inc (NYSE:HPP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HPP is 53.3. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately HPP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HPP investors were disappointed as the stock returned -14% since Q2 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.