Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hudson Pacific Properties Inc (NYSE:HPP).
Hudson Pacific Properties Inc (NYSE:HPP) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of the first quarter of 2020. At the end of this article we will also compare HPP to other stocks including US Foods Holding Corp. (NYSE:USFD), Equity Commonwealth (NYSE:EQC), and Cogent Communications Holdings Inc. (NASDAQ:CCOI) to get a better sense of its popularity. 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_745223" align="aligncenter" width="392"] Daniel Sundheim of D1 Capital Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action encompassing Hudson Pacific Properties Inc (NYSE:HPP).
What have hedge funds been doing with Hudson Pacific Properties Inc (NYSE:HPP)?
Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HPP over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hudson Pacific Properties Inc (NYSE:HPP) was held by Long Pond Capital, which reported holding $70 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $34.7 million position. Other investors bullish on the company included D1 Capital Partners, Waterfront Capital Partners, and Land & Buildings Investment Management. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to Hudson Pacific Properties Inc (NYSE:HPP), around 9.39% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, earmarking 3.73 percent of its 13F equity portfolio to HPP.
Seeing as Hudson Pacific Properties Inc (NYSE:HPP) has experienced bearish sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of money managers that decided to sell off their positions entirely last quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management cut the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $17.2 million in stock. Anand Parekh's fund, Alyeska Investment Group, also dumped its stock, about $2.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hudson Pacific Properties Inc (NYSE:HPP) but similarly valued. We will take a look at US Foods Holding Corp. (NYSE:USFD), Equity Commonwealth (NYSE:EQC), Cogent Communications Holdings Inc. (NASDAQ:CCOI), and Tetra Tech, Inc. (NASDAQ:TTEK). This group of stocks' market caps resemble HPP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,33,507135,-4 EQC,20,176264,-2 CCOI,27,454195,3 TTEK,21,115608,-2 Average,25.25,313301,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $232 million in HPP's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Equity Commonwealth (NYSE:EQC) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Hudson Pacific Properties Inc (NYSE:HPP) is even less popular than EQC. Hedge funds dodged a bullet by taking a bearish stance towards HPP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately HPP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); HPP investors were disappointed as the stock returned -0.8% during the second quarter (through June 22nd) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.