Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Is Duke Realty Corporation (NYSE:DRE) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Duke Realty Corporation (NYSE:DRE) investors should be aware of an increase in hedge fund interest recently. DRE was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 19 hedge funds in our database with DRE holdings at the end of the previous quarter. Our calculations also showed that DRE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
According to most traders, hedge funds are viewed as slow, old financial vehicles of the past. While there are over 8000 funds in operation today, We look at the aristocrats of this club, approximately 850 funds. It is estimated that this group of investors shepherd bulk of the hedge fund industry’s total capital, and by keeping track of their finest picks, Insider Monkey has deciphered numerous investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
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. Now we’re going to analyze the new hedge fund action regarding Duke Realty Corporation (NYSE:DRE).
How have hedgies been trading Duke Realty Corporation (NYSE:DRE)?
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DRE over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Duke Realty Corporation (NYSE:DRE), which was worth $39.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $27.7 million worth of shares. Balyasny Asset Management, Two Sigma Advisors, and D E Shaw 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 Hill Winds Capital allocated the biggest weight to Duke Realty Corporation (NYSE:DRE), around 1.4% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.44 percent of its 13F equity portfolio to DRE.
As aggregate interest increased, key hedge funds have jumped into Duke Realty Corporation (NYSE:DRE) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in Duke Realty Corporation (NYSE:DRE). Balyasny Asset Management had $19.9 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $2.5 million investment in the stock during the quarter. The following funds were also among the new DRE investors: Matthew Tewksbury’s Stevens Capital Management, Michael Gelband’s ExodusPoint Capital, and Parvinder Thiara’s Athanor Capital.
Let’s check out hedge fund activity in other stocks similar to Duke Realty Corporation (NYSE:DRE). We will take a look at Continental Resources, Inc. (NYSE:CLR), W.R. Berkley Corporation (NYSE:WRB), Vornado Realty Trust (NYSE:VNO), and Teledyne Technologies Incorporated (NYSE:TDY). This group of stocks’ market values are closest to DRE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLR | 38 | 569767 | -1 |
| WRB | 34 | 417937 | 8 |
| VNO | 31 | 688640 | -6 |
| TDY | 24 | 546627 | -7 |
| Average | 31.75 | 555743 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $183 million in DRE’s case. Continental Resources, Inc. (NYSE:CLR) is the most popular stock in this table. On the other hand Teledyne Technologies Incorporated (NYSE:TDY) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Duke Realty Corporation (NYSE:DRE) is even less popular than TDY. 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 managed to beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on DRE, though not to the same extent, as the stock returned -24.1% during the same time period and outperformed the market as well.
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.
