Do Hedge Funds Love Corporate Office Properties Trust (OFC)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Corporate Office Properties Trust (NYSE:OFC) .

Corporate Office Properties Trust (NYSE:OFC) investors should pay attention to a decrease in support from the world’s most successful money managers lately. There were 13 hedge funds in our database with OFC positions at the end of the previous quarter. 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 Stantec Inc. (USA) (NYSE:STN), Louisiana-Pacific Corporation (NYSE:LPX), and CNO Financial Group Inc (NYSE:CNO) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, let’s go over the latest action encompassing Corporate Office Properties Trust (NYSE:OFC).

What have hedge funds been doing with Corporate Office Properties Trust (NYSE:OFC)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a plunge of 23% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards OFC over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies which is one of the largest hedge funds in the world has the most valuable position in Corporate Office Properties Trust (NYSE:OFC), worth close to $55.3 million. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $19.1 million position. Remaining members of the smart money that hold long positions contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Because Corporate Office Properties Trust (NYSE:OFC) has weathered bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers that decided to sell off their full holdings last quarter. Intriguingly, Richard Driehaus’ Driehaus Capital dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $4 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also sold off its stock, about $0.6 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Corporate Office Properties Trust (NYSE:OFC) but similarly valued. We will take a look at Stantec Inc. (USA) (NYSE:STN), Louisiana-Pacific Corporation (NYSE:LPX), CNO Financial Group Inc (NYSE:CNO), and UniFirst Corp (NYSE:UNF). All of these stocks’ market caps resemble OFC’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $109 million in OFC’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Stantec Inc. (USA) (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. Corporate Office Properties Trust (NYSE:OFC) 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. In this regard LPX might be a better candidate to consider taking a long position in.

Disclosure: None