Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Douglas Emmett, Inc. (NYSE:DEI) from the perspective of those elite funds.
Douglas Emmett, Inc. (NYSE:DEI) was in 14 hedge funds’ portfolios at the end of March. DEI investors should be aware of an increase in support from the world’s most elite money managers of late. There were 12 hedge funds in our database with DEI holdings at the end of the previous quarter. Our calculations also showed that DEI isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action surrounding Douglas Emmett, Inc. (NYSE:DEI).
What does smart money think about Douglas Emmett, Inc. (NYSE:DEI)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in DEI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Douglas Emmett, Inc. (NYSE:DEI), with a stake worth $165.4 million reported as of the end of March. Trailing Renaissance Technologies was AEW Capital Management, which amassed a stake valued at $82.2 million. Zimmer Partners, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the largest position in Douglas Emmett, Inc. (NYSE:DEI). Two Sigma Advisors had $1.3 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new DEI investors: Michael Gelband’s ExodusPoint Capital, David Harding’s Winton Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Douglas Emmett, Inc. (NYSE:DEI) but similarly valued. We will take a look at Nordstrom, Inc. (NYSE:JWN), Nutanix, Inc. (NASDAQ:NTNX), Foot Locker, Inc. (NYSE:FL), and KAR Auction Services Inc (NYSE:KAR). All of these stocks’ market caps are similar to DEI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JWN | 26 | 283069 | 3 |
| NTNX | 36 | 456099 | -1 |
| FL | 35 | 956263 | 0 |
| KAR | 42 | 1234048 | 8 |
| Average | 34.75 | 732370 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.75 hedge funds with bullish positions and the average amount invested in these stocks was $732 million. That figure was $363 million in DEI’s case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand Nordstrom, Inc. (NYSE:JWN) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Douglas Emmett, Inc. (NYSE:DEI) is even less popular than JWN. Hedge funds dodged a bullet by taking a bearish stance towards DEI. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately DEI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); DEI investors were disappointed as the stock returned 3.4% during the same time frame 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 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
