Is Extra Space Storage, Inc. (NYSE:EXR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Extra Space Storage, Inc. (NYSE:EXR) shareholders have witnessed an increase in support from the world's most elite money managers lately. EXR was in 24 hedge funds' portfolios at the end of December. There were 22 hedge funds in our database with EXR holdings at the end of the previous quarter. Our calculations also showed that EXR 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' 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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the recent hedge fund action surrounding Extra Space Storage, Inc. (NYSE:EXR).
What have hedge funds been doing with Extra Space Storage, Inc. (NYSE:EXR)?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXR over the last 14 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Extra Space Storage, Inc. (NYSE:EXR). Arrowstreet Capital has a $67.2 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $50.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions encompass Jim Simons's Renaissance Technologies, Phill Gross and Robert Atchinson's Adage Capital Management and D. E. Shaw's D E Shaw.
Now, key money managers were breaking ground themselves. Castle Hook Partners, managed by Josh Donfeld and David Rogers, created the most valuable position in Extra Space Storage, Inc. (NYSE:EXR). Castle Hook Partners had $3.3 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $2.8 million investment in the stock during the quarter. The following funds were also among the new EXR investors: Jeffrey Pierce's Snow Park Capital Partners, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's now review hedge fund activity in other stocks similar to Extra Space Storage, Inc. (NYSE:EXR). We will take a look at Godaddy Inc (NYSE:GDDY), Quest Diagnostics Incorporated (NYSE:DGX), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), and The Mosaic Company (NYSE:MOS). This group of stocks' market values are similar to EXR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GDDY,43,2780202,-5 DGX,26,583622,-12 SSNC,37,1400952,-4 MOS,37,765297,3 Average,35.75,1382518,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.75 hedge funds with bullish positions and the average amount invested in these stocks was $1383 million. That figure was $211 million in EXR's case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Quest Diagnostics Incorporated (NYSE:DGX) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Extra Space Storage, Inc. (NYSE:EXR) is even less popular than DGX. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately EXR wasn't in this group. Hedge funds that bet on EXR were disappointed as the stock returned 11.2% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.