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Were These Hedge Funds Right About Dumping Stag Industrial Inc (STAG)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Stag Industrial Inc (NYSE:STAG).

Stag Industrial Inc (NYSE:STAG) has experienced a decrease in support from the world's most elite money managers lately. Stag Industrial Inc (NYSE:STAG) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 25. Our calculations also showed that STAG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Clint Carlson of Carlson Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we're going to review the key hedge fund action surrounding Stag Industrial Inc (NYSE:STAG).

Do Hedge Funds Think STAG Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STAG over the last 23 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Stag Industrial Inc (NYSE:STAG) was held by Waterfront Capital Partners, which reported holding $56.5 million worth of stock at the end of December. It was followed by Millennium Management with a $39.7 million position. Other investors bullish on the company included Balyasny Asset Management, Motley Fool Asset Management, and Carlson Capital. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Stag Industrial Inc (NYSE:STAG), around 5.11% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, earmarking 5.06 percent of its 13F equity portfolio to STAG.

Judging by the fact that Stag Industrial Inc (NYSE:STAG) has experienced a decline in interest from the smart money, we can see that there lies a certain "tier" of hedge funds that slashed their entire stakes heading into Q2. Intriguingly, Ken Heebner's Capital Growth Management dropped the biggest investment of all the hedgies followed by Insider Monkey, totaling about $10.6 million in stock, and Daniel Johnson's Gillson Capital was right behind this move, as the fund cut about $8.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 8 funds heading into Q2.

Let's also examine hedge fund activity in other stocks similar to Stag Industrial Inc (NYSE:STAG). We will take a look at Cousins Properties Incorporated (NYSE:CUZ), Schrodinger, Inc. (NASDAQ:SDGR), ACV Auctions Inc. (NASDAQ:ACVA), Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), NOV Inc. (NYSE:NOV), Fox Factory Holding Corp (NASDAQ:FOXF), and TIM S.A. (NYSE:TIMB). This group of stocks' market caps match STAG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUZ,16,73697,0 SDGR,17,930544,-7 ACVA,25,156405,25 ASR,8,47384,-2 NOV,29,898311,0 FOXF,14,106973,-1 TIMB,12,100589,0 Average,17.3,330558,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $173 million in STAG's case. NOV Inc. (NYSE:NOV) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) is the least popular one with only 8 bullish hedge fund positions. Stag Industrial Inc (NYSE:STAG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STAG is 38.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on STAG, though not to the same extent, as the stock returned 20.7% since the end of Q1 (through July 23rd) and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.