Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first half of 2019. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards First Industrial Realty Trust, Inc. (NYSE:FR) to find out whether it was one of their high conviction long-term ideas.
First Industrial Realty Trust, Inc. (NYSE:FR) investors should be aware of an increase in enthusiasm from smart money in recent months. FR was in 18 hedge funds’ portfolios at the end of June. There were 11 hedge funds in our database with FR positions at the end of the previous quarter. Our calculations also showed that FR isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the key hedge fund action regarding First Industrial Realty Trust, Inc. (NYSE:FR).
Hedge fund activity in First Industrial Realty Trust, Inc. (NYSE:FR)
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 64% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FR over the last 16 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in First Industrial Realty Trust, Inc. (NYSE:FR), which was worth $92.6 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $36.3 million worth of shares. Moreover, Carlson Capital, Long Pond Capital, and Waterfront Capital Partners were also bullish on First Industrial Realty Trust, Inc. (NYSE:FR), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers have jumped into First Industrial Realty Trust, Inc. (NYSE:FR) headfirst. Long Pond Capital, managed by John Khoury, assembled the largest position in First Industrial Realty Trust, Inc. (NYSE:FR). Long Pond Capital had $27.6 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $7.1 million position during the quarter. The following funds were also among the new FR investors: Dmitry Balyasny’s Balyasny Asset Management, Matthew Tewksbury’s Stevens Capital Management, and Richard Driehaus’s Driehaus Capital.
Let’s go over hedge fund activity in other stocks similar to First Industrial Realty Trust, Inc. (NYSE:FR). These stocks are Macerich Company (NYSE:MAC), Nuance Communications Inc. (NASDAQ:NUAN), Prosperity Bancshares, Inc. (NYSE:PB), and Clarivate Analytics Plc (NYSE:CCC). This group of stocks’ market caps resemble FR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAC | 21 | 288149 | -1 |
| NUAN | 28 | 529243 | 0 |
| PB | 16 | 107741 | 7 |
| CCC | 21 | 437169 | -1 |
| Average | 21.5 | 340576 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $290 million in FR’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 16 bullish hedge fund positions. First Industrial Realty Trust, Inc. (NYSE:FR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on FR as the stock returned 8.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
