In this article we will take a look at whether hedge funds think Tanger Factory Outlet Centers Inc. (NYSE:SKT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Tanger Factory Outlet Centers Inc. (NYSE:SKT) worth your attention right now? Investors who are in the know are getting more optimistic. The number of bullish hedge fund positions inched up by 2 in recent months. Our calculations also showed that SKT 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.
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 S&P 500 ETFs by 58 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 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.
[caption id="attachment_30602" align="aligncenter" width="400"] Philippe Laffont of Coatue Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind we're going to analyze the new hedge fund action regarding Tanger Factory Outlet Centers Inc. (NYSE:SKT).
How are hedge funds trading Tanger Factory Outlet Centers Inc. (NYSE:SKT)?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SKT over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander's Millennium Management has the number one position in Tanger Factory Outlet Centers Inc. (NYSE:SKT), worth close to $9.7 million, amounting to less than 0.1%% of its total 13F portfolio. On Millennium Management's heels is Ted White and Christopher Kiper of Legion Partners Asset Management, with a $4.8 million position; the fund has 2% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Jonathan Auerbach's Hound Partners, David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Legion Partners Asset Management allocated the biggest weight to Tanger Factory Outlet Centers Inc. (NYSE:SKT), around 2.02% of its 13F portfolio. Hound Partners is also relatively very bullish on the stock, dishing out 0.3 percent of its 13F equity portfolio to SKT.
As one would reasonably expect, specific money managers have jumped into Tanger Factory Outlet Centers Inc. (NYSE:SKT) headfirst. Legion Partners Asset Management, managed by Ted White and Christopher Kiper, created the most valuable position in Tanger Factory Outlet Centers Inc. (NYSE:SKT). Legion Partners Asset Management had $4.8 million invested in the company at the end of the quarter. Jonathan Auerbach's Hound Partners also initiated a $3.2 million position during the quarter. The other funds with brand new SKT positions are Philippe Laffont's Coatue Management, Mike Vranos's Ellington, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now review hedge fund activity in other stocks similar to Tanger Factory Outlet Centers Inc. (NYSE:SKT). We will take a look at Hudson Ltd. (NYSE:HUD), First Financial Corp (NASDAQ:THFF), Ebix Inc (NASDAQ:EBIX), and Nexa Resources S.A. (NYSE:NEXA). This group of stocks' market values resemble SKT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUD,14,35222,4 THFF,10,20394,-1 EBIX,15,44736,-4 NEXA,4,2109,-1 Average,10.75,25615,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $26 million in SKT's case. Ebix Inc (NASDAQ:EBIX) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Tanger Factory Outlet Centers Inc. (NYSE:SKT) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on SKT as the stock returned 44.8% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.