CommonWealth REIT (NYSE:CWH) investors should pay attention to an increase in hedge fund sentiment of late.
In the eyes of most traders, hedge funds are viewed as unimportant, old investment tools of years past. While there are over 8000 funds trading at the moment, we choose to focus on the upper echelon of this group, about 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by monitoring their highest performing stock picks, we have determined a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as important, positive insider trading activity is a second way to parse down the financial markets. There are a variety of incentives for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).
With all of this in mind, let’s take a glance at the key action surrounding CommonWealth REIT (NYSE:CWH).
What does the smart money think about CommonWealth REIT (NYSE:CWH)?
At year’s end, a total of 12 of the hedge funds we track were long in this stock, a change of 9% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Luxor Capital Group, managed by Christian Leone, holds the most valuable position in CommonWealth REIT (NYSE:CWH). Luxor Capital Group has a $99.9 million position in the stock, comprising 3.5% of its 13F portfolio. Coming in second is Forward Management, managed by J. Alan Reid, Jr., which held a $41.8 million position; 2.9% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include David Abrams’s Abrams Capital Management, J. Alan Reid, Jr.’s Forward Management and Ken Griffin’s Citadel Investment Group.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Luxor Capital Group, managed by Christian Leone, assembled the most outsized position in CommonWealth REIT (NYSE:CWH). Luxor Capital Group had 99.9 million invested in the company at the end of the quarter. David Abrams’s Abrams Capital Management also made a $33.5 million investment in the stock during the quarter. The other funds with brand new CWH positions are Ryan Schaper’s Point Lobos Capital and J. Alan Reid, Jr.’s Forward Management.
How are insiders trading CommonWealth REIT (NYSE:CWH)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, CommonWealth REIT (NYSE:CWH) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to CommonWealth REIT (NYSE:CWH). These stocks are Piedmont Office Realty Trust, Inc. (NYSE:PDM), Highwoods Properties Inc (NYSE:HIW), Corporate Office Properties Trust (NYSE:OFC), Mack Cali Realty Corp (NYSE:CLI), and Brookfield Canada Office Properties (NYSE:BOXC). This group of stocks are the members of the reit – office industry and their market caps are closest to CWH’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Piedmont Office Realty Trust, Inc. (NYSE:PDM) | 6 | 1 | 0 |
| Highwoods Properties Inc (NYSE:HIW) | 5 | 1 | 7 |
| Corporate Office Properties Trust (NYSE:OFC) | 5 | 0 | 6 |
| Mack Cali Realty Corp (NYSE:CLI) | 10 | 0 | 0 |
| Brookfield Canada Office Properties (NYSE:BOXC) | 2 | 0 | 0 |
With the returns demonstrated by the aforementioned time-tested strategies, retail investors should always monitor hedge fund and insider trading activity, and CommonWealth REIT (NYSE:CWH) is an important part of this process.
