Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 12.1% in 2019 (through May 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 18.7% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Saul Centers Inc (NYSE:BFS).
Saul Centers Inc (NYSE:BFS) was in 10 hedge funds’ portfolios at the end of March. BFS shareholders have witnessed an increase in hedge fund sentiment recently. There were 7 hedge funds in our database with BFS holdings at the end of the previous quarter. Our calculations also showed that BFS isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most traders, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are over 8000 funds trading at present, Our researchers hone in on the leaders of this group, approximately 750 funds. These hedge fund managers administer the majority of the hedge fund industry’s total asset base, and by tracking their top picks, Insider Monkey has spotted many investment strategies that have historically defeated the market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s view the new hedge fund action regarding Saul Centers Inc (NYSE:BFS).
Hedge fund activity in Saul Centers Inc (NYSE:BFS)
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in BFS a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Saul Centers Inc (NYSE:BFS) was held by Renaissance Technologies, which reported holding $24.1 million worth of stock at the end of March. It was followed by Millennium Management with a $4.2 million position. Other investors bullish on the company included Citadel Investment Group, GLG Partners, and Balyasny Asset Management.
As industrywide interest jumped, some big names have jumped into Saul Centers Inc (NYSE:BFS) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Saul Centers Inc (NYSE:BFS). Balyasny Asset Management had $1.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.3 million investment in the stock during the quarter. The only other fund with a brand new BFS position is Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks similar to Saul Centers Inc (NYSE:BFS). These stocks are ARMOUR Residential REIT, Inc. (NYSE:ARR), SemGroup Corp (NYSE:SEMG), Tompkins Financial Corporation (NYSE:TMP), and Radware Ltd. (NASDAQ:RDWR). This group of stocks’ market values resemble BFS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARR | 8 | 73012 | 3 |
| SEMG | 13 | 46994 | 1 |
| TMP | 5 | 15798 | 1 |
| RDWR | 17 | 344185 | -1 |
| Average | 10.75 | 119997 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $38 million in BFS’s case. Radware Ltd. (NASDAQ:RDWR) is the most popular stock in this table. On the other hand Tompkins Financial Corporation (NYSE:TMP) is the least popular one with only 5 bullish hedge fund positions. Saul Centers Inc (NYSE:BFS) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on BFS as the stock returned 13% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
