While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Duke Realty Corporation (NYSE:DRE).
Is Duke Realty Corporation (NYSE:DRE) a healthy stock for your portfolio? Investors who are in the know are in a pessimistic mood. The number of long hedge fund bets dropped by 6 recently. Our calculations also showed that DRE isn’t among the 30 most popular stocks among hedge funds. DRE was in 16 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with DRE holdings at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the fresh hedge fund action encompassing Duke Realty Corporation (NYSE:DRE).
What have hedge funds been doing with Duke Realty Corporation (NYSE:DRE)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in DRE heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AEW Capital Management held the most valuable stake in Duke Realty Corporation (NYSE:DRE), which was worth $132.1 million at the end of the third quarter. On the second spot was Balyasny Asset Management which amassed $76.6 million worth of shares. Moreover, Renaissance Technologies, Millennium Management, and D E Shaw were also bullish on Duke Realty Corporation (NYSE:DRE), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Duke Realty Corporation (NYSE:DRE) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few money managers that slashed their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest stake of the 700 funds tracked by Insider Monkey, worth about $1 million in stock. Alec Litowitz and Ross Laser’s fund, Magnetar Capital, also sold off its stock, about $0.8 million worth. These transactions are important to note, as total hedge fund interest fell by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Duke Realty Corporation (NYSE:DRE) but similarly valued. We will take a look at Westinghouse Air Brake Technologies Corp (NYSE:WAB), LINE Corporation (NYSE:LN), ASE Technology Holding Co., Ltd. (NYSE:ASX), and Nordstrom, Inc. (NYSE:JWN). This group of stocks’ market valuations are similar to DRE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WAB | 18 | 600559 | 4 |
| LN | 5 | 127221 | 1 |
| ASX | 7 | 202861 | -1 |
| JWN | 26 | 389342 | 3 |
| Average | 14 | 329996 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $343 million in DRE’s case. Nordstrom, Inc. (NYSE:JWN) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 5 bullish hedge fund positions. Duke Realty Corporation (NYSE:DRE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard JWN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
