How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Rouse Properties Inc (NYSE:RSE).
Rouse Properties Inc (NYSE:RSE) shareholders have witnessed a decrease in hedge fund interest lately. RSE was in 11 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with RSE positions at the end of the previous quarter. At the end of this article we will also compare RSE to other stocks including Babcock & Wilcox Enterprises Inc (NYSE:BW), Starwood Waypoint Residential Trust (NYSE:SWAY), and Solaredge Technologies Inc (NASDAQ:SEDG) to get a better sense of its popularity.
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With all of this in mind, let’s take a look at the latest action surrounding Rouse Properties Inc (NYSE:RSE).
Hedge fund activity in Rouse Properties Inc (NYSE:RSE)
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Murray Stahl’s Horizon Asset Management has the largest position in Rouse Properties Inc (NYSE:RSE), worth close to $41.5 million, accounting for 0.8% of its total 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $14.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Jay Petschek and Steven Major’s Corsair Capital Management, Jim Simons’s Renaissance Technologies and Bill Miller’s Legg Mason Capital Management.
Due to the fact that Rouse Properties Inc (NYSE:RSE) has witnessed falling interest from the smart money, it’s safe to say that there lies a certain “tier” of money managers who were dropping their positions entirely in the third quarter. Intriguingly, Mike Vranos’s Ellington said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, valued at an estimated $0.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Rouse Properties Inc (NYSE:RSE). We will take a look at Babcock & Wilcox Enterprises Inc (NYSE:BW), Starwood Waypoint Residential Trust (NYSE:SWAY), Solaredge Technologies Inc (NASDAQ:SEDG), and Clearwater Paper Corp (NYSE:CLW). All of these stocks’ market caps are closest to RSE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BW | 19 | 322843 | 14 |
| SWAY | 22 | 296924 | 5 |
| SEDG | 16 | 54910 | -1 |
| CLW | 12 | 40113 | 0 |
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $90 million in RSE’s case. Starwood Waypoint Residential Trust (NYSE:SWAY) is the most popular stock in this table. On the other hand Clearwater Paper Corp (NYSE:CLW) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Rouse Properties Inc (NYSE:RSE) is even less popular than CLW. 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.
