Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of QTS Realty Trust Inc (NYSE:QTS) based on that data and determine whether they were really smart about the stock.
QTS Realty Trust Inc (NYSE:QTS) investors should be aware of an increase in hedge fund sentiment lately. QTS Realty Trust Inc (NYSE:QTS) was in 29 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 21 hedge funds in our database with QTS holdings at the end of March. Our calculations also showed that QTS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Alex Litowitz of Magnetar Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a glance at the key hedge fund action regarding QTS Realty Trust Inc (NYSE:QTS).
How are hedge funds trading QTS Realty Trust Inc (NYSE:QTS)?
Heading into the third quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in QTS over the last 20 quarters. 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, Zimmer Partners was the largest shareholder of QTS Realty Trust Inc (NYSE:QTS), with a stake worth $127.5 million reported as of the end of September. Trailing Zimmer Partners was V3 Capital, which amassed a stake valued at $65.7 million. Hudson Bay Capital Management, Citadel Investment Group, and Land & Buildings Investment Management 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 V3 Capital allocated the biggest weight to QTS Realty Trust Inc (NYSE:QTS), around 15.15% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, designating 9.29 percent of its 13F equity portfolio to QTS.
Now, specific money managers have been driving this bullishness. Aequim Alternative Investments, managed by Franklin Parlamis, created the most outsized position in QTS Realty Trust Inc (NYSE:QTS). Aequim Alternative Investments had $13.6 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also made a $6.4 million investment in the stock during the quarter. The other funds with brand new QTS positions are Alec Litowitz and Ross Laser’s Magnetar Capital, Paul Tudor Jones’s Tudor Investment Corp, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as QTS Realty Trust Inc (NYSE:QTS) but similarly valued. These stocks are Telecom Argentina S.A. (NYSE:TEO), Performance Food Group Company (NYSE:PFGC), Hudson Pacific Properties Inc (NYSE:HPP), The Hanover Insurance Group, Inc. (NYSE:THG), Global Blood Therapeutics Inc (NASDAQ:GBT), Cyberark Software Ltd (NASDAQ:CYBR), and ICU Medical, Inc. (NASDAQ:ICUI). This group of stocks’ market caps resemble QTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEO | 3 | 33682 | -1 |
| PFGC | 20 | 215689 | -9 |
| HPP | 24 | 437178 | 5 |
| THG | 25 | 133465 | 1 |
| GBT | 31 | 600038 | 8 |
| CYBR | 17 | 187436 | 3 |
| ICUI | 32 | 304412 | 7 |
| Average | 21.7 | 273129 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $513 million in QTS’s case. ICU Medical, Inc. (NASDAQ:ICUI) is the most popular stock in this table. On the other hand Telecom Argentina S.A. (NYSE:TEO) is the least popular one with only 3 bullish hedge fund positions. QTS Realty Trust Inc (NYSE:QTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QTS is 84.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately QTS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on QTS were disappointed as the stock returned -0.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
