Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (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. At Insider Monkey, we pore over the filings of nearly 835 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not American Assets Trust, Inc (NYSE:AAT) makes for a good investment right now.
American Assets Trust, Inc (NYSE:AAT) investors should be aware of an increase in enthusiasm from smart money of late. Our calculations also showed that AAT 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).
Today there are plenty of tools shareholders have at their disposal to grade their holdings. Some of the most useful tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat the market by a significant amount (see the details here).
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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 go over the fresh hedge fund action regarding American Assets Trust, Inc (NYSE:AAT).
Hedge fund activity in American Assets Trust, Inc (NYSE:AAT)
Heading into the first quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the third quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in AAT a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in American Assets Trust, Inc (NYSE:AAT). Millennium Management has a $11.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $11.5 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include David Harding’s Winton Capital Management, Paul Tudor Jones’s Tudor Investment Corp and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to American Assets Trust, Inc (NYSE:AAT), around 0.15% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to AAT.
As one would reasonably expect, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in American Assets Trust, Inc (NYSE:AAT). Balyasny Asset Management had $11.5 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $1.7 million position during the quarter. The other funds with brand new AAT positions are Thomas Bailard’s Bailard Inc, Benjamin A. Smith’s Laurion Capital Management, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American Assets Trust, Inc (NYSE:AAT) but similarly valued. These stocks are Moog Inc (NYSE:MOG), DouYu International Holdings Limited (NASDAQ:DOYU), CNO Financial Group Inc (NYSE:CNO), and Audentes Therapeutics, Inc. (NASDAQ:BOLD). This group of stocks’ market caps resemble AAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOG | 21 | 102586 | 0 |
| DOYU | 6 | 41645 | -4 |
| CNO | 23 | 336702 | 3 |
| BOLD | 47 | 1009425 | 21 |
| Average | 24.25 | 372590 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $373 million. That figure was $43 million in AAT’s case. Audentes Therapeutics, Inc. (NASDAQ:BOLD) is the most popular stock in this table. On the other hand DouYu International Holdings Limited (NASDAQ:DOYU) is the least popular one with only 6 bullish hedge fund positions. American Assets Trust, Inc (NYSE:AAT) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately AAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AAT investors were disappointed as the stock returned -49.8% 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 most of these stocks already outperformed the market in Q1.
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.
