It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Stag Industrial Inc (NYSE:STAG).
Stag Industrial Inc (NYSE:STAG) was in 20 hedge funds’ portfolios at the end of September. STAG has experienced an increase in enthusiasm from smart money recently. There were 11 hedge funds in our database with STAG positions at the end of the previous quarter. Our calculations also showed that STAG 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 the 21st century investor’s toolkit there are many methods stock traders have at their disposal to value publicly traded companies. A duo of the best methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce their index-focused peers by a solid amount (see the details here).
Jeffrey Talpins of Element Capital
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. We’re going to check out the latest hedge fund action encompassing Stag Industrial Inc (NYSE:STAG).
What does smart money think about Stag Industrial Inc (NYSE:STAG)?
Heading into the fourth quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 82% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards STAG over the last 17 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, Zimmer Partners held the most valuable stake in Stag Industrial Inc (NYSE:STAG), which was worth $44.2 million at the end of the third quarter. On the second spot was Carlson Capital which amassed $43.7 million worth of shares. Marshall Wace, Balyasny Asset Management, and Element Capital 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 Element Capital Management allocated the biggest weight to Stag Industrial Inc (NYSE:STAG), around 1.01% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, earmarking 0.98 percent of its 13F equity portfolio to STAG.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Stag Industrial Inc (NYSE:STAG) headfirst. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Stag Industrial Inc (NYSE:STAG). Marshall Wace had $38.5 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $11.6 million investment in the stock during the quarter. The following funds were also among the new STAG investors: Israel Englander’s Millennium Management, David Rodriguez-Fraile’s BlueMar Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks similar to Stag Industrial Inc (NYSE:STAG). We will take a look at Lazard Ltd (NYSE:LAZ), Viper Energy Partners LP (NASDAQ:VNOM), nVent Electric plc (NYSE:NVT), and Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). This group of stocks’ market caps match STAG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZ | 13 | 600550 | -3 |
| VNOM | 14 | 130553 | 1 |
| NVT | 21 | 564545 | -7 |
| OLLI | 22 | 98695 | -9 |
| Average | 17.5 | 348586 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $218 million in STAG’s case. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) is the least popular one with only 13 bullish hedge fund positions. Stag Industrial Inc (NYSE:STAG) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on STAG, though not to the same extent, as the stock returned 5.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
