The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Independence Realty Trust Inc (NYSEMKT:IRT) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Hedge fund interest in Independence Realty Trust Inc (NYSEMKT:IRT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare IRT to other stocks including Safe Bulkers, Inc. (NYSE:SB), Big 5 Sporting Goods Corporation (NASDAQ:BGFV), and Furmanite Corporation (NYSE:FRM) to get a better sense of its popularity.
Follow Independence Realty Trust Inc. (NYSEMKT:IRT)
Follow Independence Realty Trust Inc. (NYSEMKT:IRT)
Today there are tons of methods market participants employ to appraise their holdings. A duo of the most useful methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a very impressive amount (see the details here).
With all of this in mind, let’s check out the recent action regarding Independence Realty Trust Inc (NYSEMKT:IRT).
What have hedge funds been doing with Independence Realty Trust Inc (NYSEMKT:IRT)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Senator Investment Group, managed by Doug Silverman and Alexander Klabin, holds the biggest position in Independence Realty Trust Inc (NYSEMKT:IRT). Senator Investment Group has an $27.6 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Monarch Alternative Capital, led by Michael Weinstock, holding an $25 million position; 8.8% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass Michael Thompson’s BHR Capital, J. Alan Reid, Jr.’s Forward Management and Phillip Goldstein, Andrew Dakos and Steven Samuels’s Bulldog Investors.
Intriguingly, John Overdeck and David Siegel’s Two Sigma Advisors cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.4 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Independence Realty Trust Inc (NYSEMKT:IRT). These stocks are Safe Bulkers, Inc. (NYSE:SB), Big 5 Sporting Goods Corporation (NASDAQ:BGFV), Furmanite Corporation (NYSE:FRM), and Jamba, Inc. (NASDAQ:JMBA). All of these stocks’ market caps match IRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SB | 6 | 13244 | 0 |
| BGFV | 15 | 44741 | -1 |
| FRM | 15 | 52400 | 4 |
| JMBA | 8 | 64296 | -3 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $81 million in IRT’s case. Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is the most popular stock in this table. On the other hand Safe Bulkers, Inc. (NYSE:SB) is the least popular one with only 6 bullish hedge fund positions. Independence Realty Trust Inc (NYSEMKT:IRT) 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 BGFV might be a better candidate to consider a long position.
