At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Brandywine Realty Trust (NYSE:BDN) makes for a good investment right now.
Is Brandywine Realty Trust (NYSE:BDN) worth your attention right now? Prominent investors are taking a bullish view. The number of bullish hedge fund positions rose by 3 lately. Our calculations also showed that BDN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BDN was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. There were 14 hedge funds in our database with BDN holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the key hedge fund action regarding Brandywine Realty Trust (NYSE:BDN).
How are hedge funds trading Brandywine Realty Trust (NYSE:BDN)?
Heading into the fourth quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BDN over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Waterfront Capital Partners was the largest shareholder of Brandywine Realty Trust (NYSE:BDN), with a stake worth $31.1 million reported as of the end of September. Trailing Waterfront Capital Partners was Renaissance Technologies, which amassed a stake valued at $30.6 million. Millennium Management, Forward Management, and GLG Partners 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 Brandywine Realty Trust (NYSE:BDN), around 4.8% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, dishing out 1.25 percent of its 13F equity portfolio to BDN.
As one would reasonably expect, specific money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, assembled the biggest position in Brandywine Realty Trust (NYSE:BDN). Winton Capital Management had $2.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Bruce Kovner’s Caxton Associates and Renee Yao’s Neo Ivy Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Brandywine Realty Trust (NYSE:BDN). We will take a look at M.D.C. Holdings, Inc. (NYSE:MDC), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), Holly Energy Partners, L.P. (NYSE:HEP), and Baozun Inc (NASDAQ:BZUN). This group of stocks’ market valuations are similar to BDN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDC | 17 | 114744 | 0 |
| IBA | 4 | 42960 | 1 |
| HEP | 6 | 14765 | 5 |
| BZUN | 16 | 58309 | 3 |
| Average | 10.75 | 57695 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $121 million in BDN’s case. M.D.C. Holdings, Inc. (NYSE:MDC) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 4 bullish hedge fund positions. Brandywine Realty Trust (NYSE:BDN) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BDN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BDN were disappointed as the stock returned 3.2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
