We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Easterly Government Properties Inc (NYSE:DEA).
Is Easterly Government Properties Inc (NYSE:DEA) the right pick for your portfolio? Hedge funds are taking a bearish view. The number of long hedge fund bets fell by 1 lately. Our calculations also showed that DEA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). DEA was in 10 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 11 hedge funds in our database with DEA positions at the end of the previous quarter.
If you'd ask most investors, hedge funds are perceived as slow, old investment tools of the past. While there are over 8000 funds in operation today, Our experts look at the crème de la crème of this group, approximately 850 funds. It is estimated that this group of investors orchestrate the lion's share of all hedge funds' total capital, and by following their first-class equity investments, Insider Monkey has come up with a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_673876" align="aligncenter" width="397"] John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager's coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind we're going to take a peek at the fresh hedge fund action surrounding Easterly Government Properties Inc (NYSE:DEA).
What have hedge funds been doing with Easterly Government Properties Inc (NYSE:DEA)?
At Q4's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DEA over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Easterly Government Properties Inc (NYSE:DEA), worth close to $69.6 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Winton Capital Management, led by David Harding, holding a $18 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain John Overdeck and David Siegel's Two Sigma Advisors, Mark Coe's Intrinsic Edge Capital and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Easterly Government Properties Inc (NYSE:DEA), around 0.73% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.25 percent of its 13F equity portfolio to DEA.
Due to the fact that Easterly Government Properties Inc (NYSE:DEA) has witnessed declining sentiment from the smart money, it's safe to say that there were a few hedgies who sold off their entire stakes last quarter. Intriguingly, Clint Carlson's Carlson Capital sold off the largest investment of the 750 funds watched by Insider Monkey, valued at about $19.3 million in stock. Steve Cohen's fund, Point72 Asset Management, also dropped its stock, about $1.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Easterly Government Properties Inc (NYSE:DEA) but similarly valued. We will take a look at MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), PJT Partners Inc (NYSE:PJT), Usa Compression Partners LP (NYSE:USAC), and Hub Group Inc (NASDAQ:HUBG). This group of stocks' market valuations are similar to DEA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTSI,18,223816,3 PJT,20,156297,3 USAC,8,19195,4 HUBG,19,285556,-4 Average,16.25,171216,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $106 million in DEA's case. PJT Partners Inc (NYSE:PJT) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 8 bullish hedge fund positions. Easterly Government Properties Inc (NYSE:DEA) is not the least popular stock in this group but hedge fund interest is still below average. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. A small number of hedge funds were also right about betting on DEA as the stock returned 14.4% during the same time period and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.