We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards RPT Realty (NYSE:RPT).
Is RPT a good stock to buy now? RPT Realty (NYSE:RPT) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. RPT has seen an increase in activity from the world's largest hedge funds in recent months. There were 14 hedge funds in our database with RPT positions at the end of the second quarter. 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 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Burry of Scion Asset Management
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 analyze the new hedge fund action regarding RPT Realty (NYSE:RPT).
Do Hedge Funds Think RPT Is A Good Stock To Buy Now?
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in RPT a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Scion Asset Management, managed by Michael Burry, holds the biggest position in RPT Realty (NYSE:RPT). Scion Asset Management has a $7.3 million position in the stock, comprising 2.2% of its 13F portfolio. The second largest stake is held by Balyasny Asset Management, led by Dmitry Balyasny, holding a $5.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass Matthew Crandall Gilman's Hill Winds Capital, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to RPT Realty (NYSE:RPT), around 2.45% of its 13F portfolio. Scion Asset Management is also relatively very bullish on the stock, dishing out 2.22 percent of its 13F equity portfolio to RPT.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Scion Asset Management, managed by Michael Burry, initiated the most outsized position in RPT Realty (NYSE:RPT). Scion Asset Management had $7.3 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner's Engineers Gate Manager, Noam Gottesman's GLG Partners, and Benjamin A. Smith's Laurion Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to RPT Realty (NYSE:RPT). We will take a look at Koppers Holdings Inc. (NYSE:KOP), G1 Therapeutics, Inc. (NASDAQ:GTHX), Mechel PAO (NYSE:MTL), eGain Corporation (NASDAQ:EGAN), Luther Burbank Corporation (NASDAQ:LBC), Boston Omaha Corporation (NASDAQ:BOMN), and Catchmark Timber Trust Inc (NYSE:CTT). This group of stocks' market values match RPT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KOP,12,15724,1 GTHX,13,30837,2 MTL,3,1788,0 EGAN,11,36330,0 LBC,4,3020,2 BOMN,5,166210,-7 CTT,13,53862,4 Average,8.7,43967,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $25 million in RPT's case. G1 Therapeutics, Inc. (NASDAQ:GTHX) is the most popular stock in this table. On the other hand Mechel PAO (NYSE:MTL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks RPT Realty (NYSE:RPT) is more popular among hedge funds. Our overall hedge fund sentiment score for RPT is 88. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on RPT as the stock returned 52.9% since the end of September (through 12/14) 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.
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Disclosure: None. This article was originally published at Insider Monkey.