While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Eastgroup Properties Inc (NYSE:EGP).
Eastgroup Properties Inc (NYSE:EGP) was in 7 hedge funds' portfolios at the end of December. EGP has experienced an increase in support from the world's most elite money managers recently. There were 5 hedge funds in our database with EGP positions at the end of the previous quarter. Our calculations also showed that egp isn't among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
We're going to take a look at the fresh hedge fund action regarding Eastgroup Properties Inc (NYSE:EGP).
How are hedge funds trading Eastgroup Properties Inc (NYSE:EGP)?
At Q4's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the second quarter of 2018. By comparison, 8 hedge funds held shares or bullish call options in EGP a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons's Renaissance Technologies has the most valuable position in Eastgroup Properties Inc (NYSE:EGP), worth close to $11.6 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $6.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass Ken Griffin's Citadel Investment Group, Cliff Asness's AQR Capital Management and Dmitry Balyasny's Balyasny Asset Management.
As aggregate interest increased, key hedge funds have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the most outsized position in Eastgroup Properties Inc (NYSE:EGP). PEAK6 Capital Management had $0.1 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks similar to Eastgroup Properties Inc (NYSE:EGP). These stocks are Schneider National, Inc. (NYSE:SNDR), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Graphic Packaging Holding Company (NYSE:GPK), and OneMain Holdings Inc (NYSE:OMF). This group of stocks' market valuations resemble EGP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNDR,20,92694,1 TARO,8,61336,-6 GPK,20,636989,-5 OMF,22,239773,-4 Average,17.5,257698,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $25 million in EGP's case. OneMain Holdings Inc (NYSE:OMF) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Eastgroup Properties Inc (NYSE:EGP) is even less popular than TARO. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on EGP, though not to the same extent, as the stock returned 20.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.