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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards One Liberty Properties, Inc. (NYSE:OLP).
Is OLP a good stock to buy now? One Liberty Properties, Inc. (NYSE:OLP) shareholders have witnessed a decrease in support from the world's most elite money managers lately. One Liberty Properties, Inc. (NYSE:OLP) was in 7 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. Our calculations also showed that OLP isn't among the 30 most popular stocks among hedge funds (click for Q3 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 66 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.
Michael Price of MFP Investors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's review the key hedge fund action regarding One Liberty Properties, Inc. (NYSE:OLP).
Hedge fund activity in One Liberty Properties, Inc. (NYSE:OLP)
At third quarter's end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OLP over the last 21 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of One Liberty Properties, Inc. (NYSE:OLP), with a stake worth $16.3 million reported as of the end of September. Trailing Renaissance Technologies was MFP Investors, which amassed a stake valued at $3.7 million. Arrowstreet Capital, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to One Liberty Properties, Inc. (NYSE:OLP), around 0.68% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.38 percent of its 13F equity portfolio to OLP.
Since One Liberty Properties, Inc. (NYSE:OLP) has experienced falling interest from hedge fund managers, it's easy to see that there lies a certain "tier" of hedge funds that elected to cut their positions entirely in the third quarter. Intriguingly, Ken Griffin's Citadel Investment Group dropped the biggest position of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $0.7 million in stock, and Thomas Bailard's Bailard Inc was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to One Liberty Properties, Inc. (NYSE:OLP). We will take a look at Daily Journal Corporation (NASDAQ:DJCO), Cutera, Inc. (NASDAQ:CUTR), American Superconductor Corporation (NASDAQ:AMSC), Zix Corporation (NASDAQ:ZIXI), New Senior Investment Group Inc (NYSE:SNR), Tiziana Life Sciences plc (NASDAQ:TLSA), and Pivotal Investment Corporation II (NYSE:PIC). This group of stocks' market values resemble OLP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DJCO,2,651,0 CUTR,19,79300,4 AMSC,8,47220,-3 ZIXI,7,17203,-9 SNR,13,50201,1 TLSA,4,1035,3 PIC,13,68804,1 Average,9.4,37773,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $22 million in OLP's case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. One Liberty Properties, Inc. (NYSE:OLP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OLP is 45. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on OLP as the stock returned 13.8% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.