Is Stag Industrial Inc (NYSE:STAG) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Stag Industrial Inc (NYSE:STAG) was in 11 hedge funds' portfolios at the end of the second quarter of 2019. STAG shareholders have witnessed a decrease in hedge fund sentiment lately. There were 15 hedge funds in our database with STAG holdings at the end of the previous quarter. Our calculations also showed that STAG isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action regarding Stag Industrial Inc (NYSE:STAG).
How have hedgies been trading Stag Industrial Inc (NYSE:STAG)?
At Q2's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the first quarter of 2019. By comparison, 9 hedge funds held shares or bullish call options in STAG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Zimmer Partners was the largest shareholder of Stag Industrial Inc (NYSE:STAG), with a stake worth $90.7 million reported as of the end of March. Trailing Zimmer Partners was Carlson Capital, which amassed a stake valued at $23.2 million. Balyasny Asset Management, Forward Management, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Stag Industrial Inc (NYSE:STAG) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their positions entirely last quarter. Interestingly, Israel Englander's Millennium Management said goodbye to the biggest stake of the "upper crust" of funds watched by Insider Monkey, comprising about $3.3 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also said goodbye to its stock, about $1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Stag Industrial Inc (NYSE:STAG) but similarly valued. We will take a look at ACI Worldwide Inc (NASDAQ:ACIW), The Timken Company (NYSE:TKR), Eagle Materials, Inc. (NYSE:EXP), and LHC Group, Inc. (NASDAQ:LHCG). All of these stocks' market caps are closest to STAG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACIW,23,356703,0 TKR,26,248660,0 EXP,36,681764,7 LHCG,26,108059,3 Average,27.75,348797,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $138 million in STAG's case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand ACI Worldwide Inc (NASDAQ:ACIW) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Stag Industrial Inc (NYSE:STAG) is even less popular than ACIW. Hedge funds dodged a bullet by taking a bearish stance towards STAG. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STAG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); STAG investors were disappointed as the stock returned -1.3% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.