We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Rexford Industrial Realty Inc (NYSE:REXR) based on that data.
Is Rexford Industrial Realty Inc (NYSE:REXR) worth your attention right now? Hedge funds are in a pessimistic mood. The number of bullish hedge fund bets retreated by 6 lately. Our calculations also showed that REXR 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_26335" align="aligncenter" width="392"] Ken Fisher of Fisher Asset Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 free email services without phone verification to identify emerging trends that are likely to lead to 1000% gains in the coming years. 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 view the key hedge fund action encompassing Rexford Industrial Realty Inc (NYSE:REXR).
How have hedgies been trading Rexford Industrial Realty Inc (NYSE:REXR)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in REXR a year ago. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Rexford Industrial Realty Inc (NYSE:REXR), which was worth $10.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $9.1 million worth of shares. Brasada Capital Management, Fisher Asset Management, and Driehaus Capital 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 Brasada Capital Management allocated the biggest weight to Rexford Industrial Realty Inc (NYSE:REXR), around 2.56% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.3 percent of its 13F equity portfolio to REXR.
Due to the fact that Rexford Industrial Realty Inc (NYSE:REXR) has witnessed bearish sentiment from the smart money, logic holds that there were a few funds that elected to cut their positions entirely by the end of the first quarter. Interestingly, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital dropped the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $1.8 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $1.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 6 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Rexford Industrial Realty Inc (NYSE:REXR) but similarly valued. These stocks are Trex Company, Inc. (NYSE:TREX), Ares Capital Corporation (NASDAQ:ARCC), Sonoco Products Company (NYSE:SON), and Credit Acceptance Corp. (NASDAQ:CACC). All of these stocks' market caps are similar to REXR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TREX,17,93470,-3 ARCC,26,128884,4 SON,23,122325,-1 CACC,22,581386,-9 Average,22,231516,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $39 million in REXR's case. Ares Capital Corporation (NASDAQ:ARCC) is the most popular stock in this table. On the other hand Trex Company, Inc. (NYSE:TREX) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Rexford Industrial Realty Inc (NYSE:REXR) is even less popular than TREX. Hedge funds dodged a bullet by taking a bearish stance towards REXR. 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 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately REXR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); REXR investors were disappointed as the stock returned -1.5% during the second quarter (through June 25th) 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.