We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Brookfield Property Partners LP (NYSE:BPY).
Hedge fund interest in Brookfield Property Partners LP (NYSE:BPY) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BPY to other stocks including Aluminum Corp. of China Limited (NYSE:ACH), Hubbell Incorporated (NYSE:HUBB), and Royal Gold, Inc (NASDAQ:RGLD) to get a better sense of its popularity.
At the moment there are several signals investors can use to appraise publicly traded companies. A duo of the most under-the-radar signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best money managers can outpace their index-focused peers by a very impressive margin (see the details here).
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the fresh hedge fund action encompassing Brookfield Property Partners LP (NYSE:BPY).
What does smart money think about Brookfield Property Partners LP (NYSE:BPY)?
At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BPY over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Marshall Wace LLP held the most valuable stake in Brookfield Property Partners LP (NYSE:BPY), which was worth $34.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $12.5 million worth of shares. Forward Management, Arrowstreet Capital, 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 Forward Management allocated the biggest weight to Brookfield Property Partners LP (NYSE:BPY), around 1.19% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.23 percent of its 13F equity portfolio to BPY.
Seeing as Brookfield Property Partners LP (NYSE:BPY) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their entire stakes in the third quarter. Intriguingly, John Thiessen’s Vertex One Asset Management sold off the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $4.9 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also dropped its stock, about $0.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Brookfield Property Partners LP (NYSE:BPY) but similarly valued. We will take a look at Aluminum Corp. of China Limited (NYSE:ACH), Hubbell Incorporated (NYSE:HUBB), Royal Gold, Inc (NASDAQ:RGLD), and Genpact Limited (NYSE:G). This group of stocks’ market caps are closest to BPY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACH | 3 | 4752 | 0 |
| HUBB | 23 | 413964 | -2 |
| RGLD | 30 | 177674 | 3 |
| G | 37 | 769167 | -1 |
| Average | 23.25 | 341389 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $63 million in BPY’s case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 3 bullish hedge fund positions. Brookfield Property Partners LP (NYSE:BPY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately BPY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BPY investors were disappointed as the stock returned -36.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
