Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is RPT Realty (NYSE:RPT) a buy here? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets rose by 2 in recent months. Our calculations also showed that RPT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). RPT was in 11 hedge funds' portfolios at the end of September. There were 9 hedge funds in our database with RPT holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are seen as slow, old financial vehicles of the past. While there are more than 8000 funds in operation today, Our experts hone in on the elite of this club, about 750 funds. These investment experts oversee the majority of the smart money's total asset base, and by watching their matchless picks, Insider Monkey has unearthed many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the fresh hedge fund action encompassing RPT Realty (NYSE:RPT).
How are hedge funds trading RPT Realty (NYSE:RPT)?
At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RPT over the last 17 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Waterfront Capital Partners, managed by Eduardo Abush, holds the biggest position in RPT Realty (NYSE:RPT). Waterfront Capital Partners has a $14.8 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Dmitry Balyasny of Balyasny Asset Management, with a $12.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Ken Griffin's Citadel Investment Group, John Overdeck and David Siegel's Two Sigma Advisors and Renaissance Technologies. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to RPT Realty (NYSE:RPT), around 2.29% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to RPT.
As one would reasonably expect, key money managers were leading the bulls' herd. Waterfront Capital Partners, managed by Eduardo Abush, created the most outsized position in RPT Realty (NYSE:RPT). Waterfront Capital Partners had $14.8 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also initiated a $0.6 million position during the quarter. The only other fund with a brand new RPT position is Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as RPT Realty (NYSE:RPT) but similarly valued. We will take a look at Virtusa Corporation (NASDAQ:VRTU), Benchmark Electronics, Inc. (NYSE:BHE), SM Energy Company (NYSE:SM), and Middlesex Water Company (NASDAQ:MSEX). This group of stocks' market values are similar to RPT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRTU,13,41660,0 BHE,13,45160,1 SM,20,103726,2 MSEX,10,54131,1 Average,14,61169,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $37 million in RPT's case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Middlesex Water Company (NASDAQ:MSEX) is the least popular one with only 10 bullish hedge fund positions. RPT Realty (NYSE:RPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on RPT, though not to the same extent, as the stock returned 9.1% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.