At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Industrial Logistics Properties Trust (NASDAQ:ILPT) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Our calculations also showed that ILPT 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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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 take a gander at the new hedge fund action encompassing Industrial Logistics Properties Trust (NASDAQ:ILPT).
What have hedge funds been doing with Industrial Logistics Properties Trust (NASDAQ:ILPT)?
Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 111% from the second quarter of 2018. By comparison, 11 hedge funds held shares or bullish call options in ILPT 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.
The largest stake in Industrial Logistics Properties Trust (NASDAQ:ILPT) was held by HBK Investments, which reported holding $52.9 million worth of stock at the end of December. It was followed by Newtyn Management with a $33.4 million position. Other investors bullish on the company included Yost Capital Management, Cloverdale Capital Management, and Sabrepoint Capital.
Consequently, key hedge funds have been driving this bullishness. HBK Investments, managed by David Costen Haley, initiated the most outsized position in Industrial Logistics Properties Trust (NASDAQ:ILPT). HBK Investments had $52.9 million invested in the company at the end of the quarter. Farallon Capital also made a $12 million investment in the stock during the quarter. The other funds with new positions in the stock are Shane Finemore’s Manikay Partners, Andrew Weiss’s Weiss Asset Management, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Industrial Logistics Properties Trust (NASDAQ:ILPT) but similarly valued. We will take a look at The Greenbrier Companies, Inc. (NYSE:GBX), Roan Resources, Inc. (NYSE:ROAN), Blucora Inc (NASDAQ:BCOR), and NovaGold Resources Inc. (NYSE:NG). All of these stocks’ market caps are similar to ILPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GBX | 11 | 45221 | -4 |
| ROAN | 14 | 417374 | 14 |
| BCOR | 11 | 106436 | -5 |
| NG | 19 | 164597 | 6 |
| Average | 13.75 | 183407 | 2.75 |
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 $183 million. That figure was $204 million in ILPT’s case. NovaGold Resources Inc. (NYSE:NG) is the most popular stock in this table. On the other hand The Greenbrier Companies, Inc. (NYSE:GBX) is the least popular one with only 11 bullish hedge fund positions. Industrial Logistics Properties Trust (NASDAQ:ILPT) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ILPT wasn’t nearly as popular as these 15 stock and hedge funds that were betting on ILPT were disappointed as the stock returned 1.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.