Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the nearly unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Brookfield Property REIT Inc. (NASDAQ:BPR) a healthy stock for your portfolio? The smart money is becoming hopeful. The number of bullish hedge fund bets moved up by 1 recently. Our calculations also showed that BPR isn't among the 30 most popular stocks among hedge funds (view the video below). BPR was in 16 hedge funds' portfolios at the end of June. There were 15 hedge funds in our database with BPR holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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 new hedge fund action surrounding Brookfield Property REIT Inc. (NASDAQ:BPR).
How have hedgies been trading Brookfield Property REIT Inc. (NASDAQ:BPR)?
At Q2's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the first quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in BPR a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in Brookfield Property REIT Inc. (NASDAQ:BPR), which was worth $26 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $9.3 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Two Sigma Advisors were also bullish on Brookfield Property REIT Inc. (NASDAQ:BPR), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were breaking ground themselves. Renaissance Technologies created the most outsized position in Brookfield Property REIT Inc. (NASDAQ:BPR). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Emanuel J. Friedman's EJF Capital also initiated a $1.9 million position during the quarter. The following funds were also among the new BPR investors: Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Mario Gabelli's GAMCO Investors, and Dmitry Balyasny's Balyasny Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Brookfield Property REIT Inc. (NASDAQ:BPR) but similarly valued. These stocks are CNH Industrial NV (NYSE:CNHI), Western Midstream Partners, LP (NYSE:WES), Quest Diagnostics Incorporated (NYSE:DGX), and Canopy Growth Corporation (NYSE:CGC). This group of stocks' market valuations match BPR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNHI,14,353927,-9 WES,9,159285,1 DGX,24,350395,2 CGC,4,23397,-2 Average,12.75,221751,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $62 million in BPR's case. Quest Diagnostics Incorporated (NYSE:DGX) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 4 bullish hedge fund positions. Brookfield Property REIT Inc. (NASDAQ:BPR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BPR as the stock returned 9.8% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.