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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Office Properties Income Trust (NASDAQ:OPI) based on that data and determine whether they were really smart about the stock.
Office Properties Income Trust (NASDAQ:OPI) has experienced an increase in enthusiasm from smart money lately. OPI was in 10 hedge funds' portfolios at the end of March. There were 9 hedge funds in our database with OPI holdings at the end of the previous quarter. Our calculations also showed that OPI 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.
To most market participants, hedge funds are assumed to be slow, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the moguls of this club, approximately 850 funds. These money managers have their hands on the lion's share of all hedge funds' total capital, and by paying attention to their inimitable picks, Insider Monkey has figured out many investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year 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 .
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Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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 take a look at the recent hedge fund action encompassing Office Properties Income Trust (NASDAQ:OPI).
What have hedge funds been doing with Office Properties Income Trust (NASDAQ:OPI)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2019. By comparison, 7 hedge funds held shares or bullish call options in OPI 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.
The largest stake in Office Properties Income Trust (NASDAQ:OPI) was held by Renaissance Technologies, which reported holding $9.1 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $4.3 million position. Other investors bullish on the company included Huber Capital Management, Callodine Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Office Properties Income Trust (NASDAQ:OPI), around 0.72% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to OPI.
Consequently, specific money managers have jumped into Office Properties Income Trust (NASDAQ:OPI) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most valuable position in Office Properties Income Trust (NASDAQ:OPI). Arrowstreet Capital had $1.4 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $1.1 million investment in the stock during the quarter. The only other fund with a brand new OPI position is Noam Gottesman's GLG Partners.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Office Properties Income Trust (NASDAQ:OPI) but similarly valued. These stocks are Constellation Pharmaceuticals, Inc. (NASDAQ:CNST), RLJ Lodging Trust (NYSE:RLJ), Stitch Fix, Inc. (NASDAQ:SFIX), and Sunoco LP (NYSE:SUN). This group of stocks' market values match OPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNST,25,427184,-2 RLJ,20,55694,3 SFIX,16,79738,-12 SUN,4,7173,-2 Average,16.25,142447,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $20 million in OPI's case. Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 4 bullish hedge fund positions. Office Properties Income Trust (NASDAQ:OPI) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately OPI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OPI investors were disappointed as the stock returned -2.8% during the second quarter 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.