It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Simon Property Group, Inc (NYSE:SPG) changed during the first quarter.
Simon Property Group, Inc (NYSE:SPG) investors should be aware of an increase in hedge fund interest in recent months. SPG was in 28 hedge funds' portfolios at the end of the first quarter of 2019. There were 26 hedge funds in our database with SPG holdings at the end of the previous quarter. Our calculations also showed that SPG isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a gander at the new hedge fund action encompassing Simon Property Group, Inc (NYSE:SPG).
Hedge fund activity in Simon Property Group, Inc (NYSE:SPG)
Heading into the second quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in SPG a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AEW Capital Management was the largest shareholder of Simon Property Group, Inc (NYSE:SPG), with a stake worth $305.3 million reported as of the end of March. Trailing AEW Capital Management was AQR Capital Management, which amassed a stake valued at $133 million. Millennium Management, Adage Capital Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Simon Property Group, Inc (NYSE:SPG). Citadel Investment Group had $5.1 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $1.3 million investment in the stock during the quarter. The other funds with brand new SPG positions are Michael Gelband's ExodusPoint Capital, Roy Vermus and Shlomi Bracha's Noked Capital, and Andre F. Perold's HighVista Strategies.
Let's also examine hedge fund activity in other stocks similar to Simon Property Group, Inc (NYSE:SPG). These stocks are PNC Financial Services Group Inc. (NYSE:PNC), EOG Resources Inc (NYSE:EOG), The Southern Company (NYSE:SO), and Boston Scientific Corporation (NYSE:BSX). This group of stocks' market values are closest to SPG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PNC,40,2516367,2 EOG,39,1042748,2 SO,19,846857,-1 BSX,47,2098911,1 Average,36.25,1626221,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $1626 million. That figure was $897 million in SPG's case. Boston Scientific Corporation (NYSE:BSX) is the most popular stock in this table. On the other hand The Southern Company (NYSE:SO) is the least popular one with only 19 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SPG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SPG investors were disappointed as the stock returned -9.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.