Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Regency Centers Corp (NASDAQ:REG)? The smart money sentiment can provide an answer to this question.
Is Regency Centers Corp (NASDAQ:REG) the right pick for your portfolio? Hedge funds were becoming more confident. The number of bullish hedge fund positions increased by 8 in recent months. Regency Centers Corp (NASDAQ:REG) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that REG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 17 hedge funds in our database with REG holdings at the end of March.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to review the new hedge fund action encompassing Regency Centers Corp (NASDAQ:REG).
Do Hedge Funds Think REG Is A Good Stock To Buy Now?
At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 47% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in REG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Waterfront Capital Partners was the largest shareholder of Regency Centers Corp (NASDAQ:REG), with a stake worth $60.9 million reported as of the end of June. Trailing Waterfront Capital Partners was Arrowstreet Capital, which amassed a stake valued at $29 million. Millennium Management, Castle Hook Partners, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Regency Centers Corp (NASDAQ:REG), around 4.58% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, earmarking 1.15 percent of its 13F equity portfolio to REG.
As industrywide interest jumped, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Regency Centers Corp (NASDAQ:REG). Arrowstreet Capital had $29 million invested in the company at the end of the quarter. Josh Donfeld and David Rogers’s Castle Hook Partners also initiated a $15 million position during the quarter. The other funds with brand new REG positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Daniel Johnson’s Gillson Capital.
Let’s also examine hedge fund activity in other stocks similar to Regency Centers Corp (NASDAQ:REG). We will take a look at Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Five Below Inc (NASDAQ:FIVE), LPL Financial Holdings Inc (NASDAQ:LPLA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), Cleveland-Cliffs Inc (NYSE:CLF), and Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI). This group of stocks’ market caps resemble REG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NCLH | 43 | 606617 | 9 |
| FIVE | 42 | 783248 | -1 |
| LPLA | 48 | 1500930 | 10 |
| GLPI | 27 | 515879 | -1 |
| JAZZ | 34 | 1493732 | -3 |
| CLF | 44 | 1111037 | 8 |
| MRVI | 20 | 572985 | -6 |
| Average | 36.9 | 940633 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $941 million. That figure was $193 million in REG’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is the least popular one with only 20 bullish hedge fund positions. Regency Centers Corp (NASDAQ:REG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for REG is 48.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on REG as the stock returned 10.3% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
