The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Eastgroup Properties Inc (NYSE:EGP) from the perspective of those successful funds.
Is Eastgroup Properties Inc (NYSE:EGP) an excellent investment right now? Investors who are in the know are categorically turning bullish. The number of long hedge fund bets swelled by 2 recently. EGP was in 8 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with EGP 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 LendingClub Corp (NYSE:LC), Diamond Offshore Drilling Inc (NYSE:DO), and Team Health Holdings LLC (NYSE:TMH) to gather more data points.
Follow Eastgroup Properties Inc (NYSE:EGP)
Follow Eastgroup Properties Inc (NYSE:EGP)
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.
violetkaipa/Shutterstock.com
With all of this in mind, we’re going to go over the fresh action regarding Eastgroup Properties Inc (NYSE:EGP).
Hedge fund activity in Eastgroup Properties Inc (NYSE:EGP)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in EGP over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, one of the 10 largest hedge funds in the world Millennium Management has the number one position in Eastgroup Properties Inc (NYSE:EGP), worth close to $4.7 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Matthew Tewksbury’s Stevens Capital Management and Thomas Bailard’s Bailard Inc. 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.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Two Sigma Advisors, led by John Overdeck and David Siegel, created the largest position in Eastgroup Properties Inc (NYSE:EGP). Two Sigma Advisors had $1.9 million invested in the company at the end of the quarter. The following funds were also among the new EGP investors: Mike Vranos’s Ellington and Louis Navellier’s Navellier & Associates.
Let’s now review hedge fund activity in other stocks similar to Eastgroup Properties Inc (NYSE:EGP). We will take a look at LendingClub Corp (NYSE:LC), Diamond Offshore Drilling Inc (NYSE:DO), Team Health Holdings LLC (NYSE:TMH), and Domtar Corp (USA) (NYSE:UFS). This group of stocks’ market values are similar to EGP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LC | 24 | 237509 | 0 |
| DO | 24 | 161250 | -1 |
| TMH | 20 | 494670 | -5 |
| UFS | 12 | 57499 | -6 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $12 million in EGP’s case. LendingClub Corp (NYSE:LC) is the most popular stock in this table. On the other hand Domtar Corp (USA) (NYSE:UFS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Eastgroup Properties Inc (NYSE:EGP) is even less popular than UFS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
