We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Washington Real Estate Investment Trust (NYSE:WRE) , and what that likely means for the prospects of the company and its stock.
Washington Real Estate Investment Trust (NYSE:WRE) investors should be aware of an increase in activity from the world’s largest hedge funds lately. WRE was in 11 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with WRE holdings 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 Wolverine World Wide, Inc. (NYSE:WWW), LogMeIn Inc (NASDAQ:LOGM), and Sterling Bancorp (NYSE:STL) to gather more data points.
Follow Elme Communities (NYSE:ELME)
Follow Elme Communities (NYSE:ELME)
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.
Alexander Raths/Shutterstock.com
Now, let’s analyze the latest action regarding Washington Real Estate Investment Trust (NYSE:WRE).
How have hedgies been trading Washington Real Estate Investment Trust (NYSE:WRE)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a growth of 38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WRE 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AEW Capital Management, led by Jeffrey Furber, holds the biggest position in Washington Real Estate Investment Trust (NYSE:WRE). AEW Capital Management has a $71.5 million position in the stock, comprising 1.5% of its 13F portfolio. On AEW Capital Management’s heels is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $19.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of 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.
As industrywide interest jumped, key money managers have jumped into Washington Real Estate Investment Trust (NYSE:WRE) headfirst. Stevens Capital Management, led by Matthew Tewksbury, established the largest position in Washington Real Estate Investment Trust (NYSE:WRE). Stevens Capital Management had $1.1 million invested in the company at the end of the quarter. Mike Vranos’ Ellington also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Washington Real Estate Investment Trust (NYSE:WRE) but similarly valued. We will take a look at Wolverine World Wide, Inc. (NYSE:WWW), LogMeIn Inc (NASDAQ:LOGM), Sterling Bancorp (NYSE:STL), and Chemed Corporation (NYSE:CHE). This group of stocks’ market caps are closest to WRE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WWW | 13 | 134599 | -1 |
| LOGM | 27 | 300642 | 6 |
| STL | 13 | 77719 | 4 |
| CHE | 15 | 243945 | -2 |
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 $189 million. That figure was $114 million in WRE’s case. LogMeIn Inc (NASDAQ:LOGM) is the most popular stock in this table. On the other hand Wolverine World Wide, Inc. (NYSE:WWW) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Washington Real Estate Investment Trust (NYSE:WRE) is even less popular than WWW. 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.
Disclosure: None
