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The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Stratus Properties Inc. (NASDAQ:STRS).
Hedge fund interest in Stratus Properties Inc. (NASDAQ:STRS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that STRS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), and Safe Bulkers, Inc. (NYSE:SB) to gather more data points.
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Seth Fischer of Oasis Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 let's take a peek at the recent hedge fund action surrounding Stratus Properties Inc. (NASDAQ:STRS).
Do Hedge Funds Think STRS Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in STRS over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Oasis Management, managed by Seth Fischer, holds the largest position in Stratus Properties Inc. (NASDAQ:STRS). Oasis Management has a $34.3 million position in the stock, comprising 6.1% of its 13F portfolio. On Oasis Management's heels is Deep Field Asset Management, managed by Jordan Moelis and Jeff Farroni, which holds a $3.2 million position; 1.6% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Oasis Management allocated the biggest weight to Stratus Properties Inc. (NASDAQ:STRS), around 6.09% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, setting aside 1.58 percent of its 13F equity portfolio to STRS.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Stratus Properties Inc. (NASDAQ:STRS). These stocks are Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), Safe Bulkers, Inc. (NYSE:SB), Great Ajax Corp (NYSE:AJX), Mogo Inc. (NASDAQ:MOGO), EMX Royalty Corporation (NYSE:EMX), and Iterum Therapeutics plc (NASDAQ:ITRM). This group of stocks' market values match STRS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PFHD,3,20914,1 HBB,8,10151,2 SB,8,16324,3 AJX,11,9712,3 MOGO,8,29653,4 EMX,4,10849,0 ITRM,4,2748,1 Average,6.6,14336,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $38 million in STRS's case. Great Ajax Corp (NYSE:AJX) is the most popular stock in this table. On the other hand Professional Holding Corp. (NASDAQ:PFHD) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Stratus Properties Inc. (NASDAQ:STRS) is even less popular than PFHD. Our overall hedge fund sentiment score for STRS is 27.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards STRS. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately STRS wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); STRS investors were disappointed as the stock returned -21.1% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.