“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Alexander’s, Inc. (NYSE:ALX) and see how it was affected.
Alexander’s, Inc. (NYSE:ALX) was in 11 hedge funds’ portfolios at the end of September. ALX investors should be aware of an increase in enthusiasm from smart money of late. There were 4 hedge funds in our database with ALX positions at the end of the previous quarter. Our calculations also showed that ALX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are many indicators stock market investors have at their disposal to assess stocks. Some of the most useful indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a very impressive margin (see the details here).
Israel Englander of Millennium Management
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 analyze the key hedge fund action surrounding Alexander’s, Inc. (NYSE:ALX).
How are hedge funds trading Alexander’s, Inc. (NYSE:ALX)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 175% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ALX over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Alexander’s, Inc. (NYSE:ALX), with a stake worth $48.8 million reported as of the end of September. Trailing Renaissance Technologies was EMS Capital, which amassed a stake valued at $33.4 million. Millennium Management, Long Pond 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 EMS Capital allocated the biggest weight to Alexander’s, Inc. (NYSE:ALX), around 2.66% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.62 percent of its 13F equity portfolio to ALX.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Alexander’s, Inc. (NYSE:ALX). Millennium Management had $6.1 million invested in the company at the end of the quarter. John Khoury’s Long Pond Capital also made a $4.8 million investment in the stock during the quarter. The following funds were also among the new ALX investors: Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace, and David E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks similar to Alexander’s, Inc. (NYSE:ALX). These stocks are NMI Holdings Inc (NASDAQ:NMIH), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Alexander & Baldwin Inc (NYSE:ALEX), and Mueller Water Products, Inc. (NYSE:MWA). All of these stocks’ market caps resemble ALX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMIH | 19 | 224269 | 0 |
| SFBS | 8 | 11329 | -1 |
| ALEX | 8 | 20353 | -2 |
| MWA | 20 | 282575 | 2 |
| Average | 13.75 | 134632 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $98 million in ALX’s case. Mueller Water Products, Inc. (NYSE:MWA) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 8 bullish hedge fund positions. Alexander’s, Inc. (NYSE:ALX) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ALX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ALX investors were disappointed as the stock returned -5.1% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
