Did Hedge Funds Catch A Break With Simon Property Group, Inc (SPG)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Simon Property Group, Inc (NYSE:SPG) and determine whether hedge funds had an edge regarding this stock.

Simon Property Group, Inc (NYSE:SPG) investors should be aware of an increase in hedge fund interest of late. Simon Property Group, Inc (NYSE:SPG) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SPG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Ken Heebner of Capital Growth Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to analyze the fresh hedge fund action encompassing Simon Property Group, Inc (NYSE:SPG).

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

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in SPG a year ago. 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, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Simon Property Group, Inc (NYSE:SPG). Citadel Investment Group has a $131.5 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Candlestick Capital Management, managed by Jack Woodruff, which holds a $97.5 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other peers with similar optimism include Brandon Haley’s Holocene Advisors, Stuart J. Zimmer’s Zimmer Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 2.39% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, setting aside 1.99 percent of its 13F equity portfolio to SPG.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Renaissance Technologies, assembled the most outsized position in Simon Property Group, Inc (NYSE:SPG). Renaissance Technologies had $53.7 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $26 million position during the quarter. The following funds were also among the new SPG investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Simon Property Group, Inc (NYSE:SPG) but similarly valued. We will take a look at Microchip Technology Incorporated (NASDAQ:MCHP), Vodafone Group Plc (NASDAQ:VOD), Biogen Inc. (NASDAQ:BIIB), O’Reilly Automotive Inc (NASDAQ:ORLY), Cadence Design Systems Inc (NASDAQ:CDNS), Roku, Inc. (NASDAQ:ROKU), and Schlumberger Limited. (NYSE:SLB). This group of stocks’ market valuations are closest to SPG’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.6 hedge funds with bullish positions and the average amount invested in these stocks was $1681 million. That figure was $726 million in SPG’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 18 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SPG is 56.8. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on SPG as the stock returned 14.5% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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

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