The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought W.P. Carey Inc. (NYSE:WPC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is W.P. Carey Inc. (NYSE:WPC) the right pick for your portfolio? The best stock pickers were turning bullish. The number of long hedge fund bets rose by 1 recently. W.P. Carey Inc. (NYSE:WPC) was in 23 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WPC 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). There were 22 hedge funds in our database with WPC holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to take a peek at the key hedge fund action surrounding W.P. Carey Inc. (NYSE:WPC).
How have hedgies been trading W.P. Carey Inc. (NYSE:WPC)?
At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the first quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in WPC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in W.P. Carey Inc. (NYSE:WPC), which was worth $31.6 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $13.1 million worth of shares. Alden Global Capital, Two Sigma Advisors, and Pinz Capital 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 Alden Global Capital allocated the biggest weight to W.P. Carey Inc. (NYSE:WPC), around 5.62% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 1.65 percent of its 13F equity portfolio to WPC.
As aggregate interest increased, specific money managers have been driving this bullishness. Alden Global Capital, managed by Randall Smith, established the biggest position in W.P. Carey Inc. (NYSE:WPC). Alden Global Capital had $13.1 million invested in the company at the end of the quarter. Matthew L Pinz’s Pinz Capital also initiated a $3.6 million position during the quarter. The other funds with new positions in the stock are J. Alan Reid, Jr.’s Forward Management, David Rodriguez-Fraile’s BlueMar Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks similar to W.P. Carey Inc. (NYSE:WPC). These stocks are LINE Corporation (NYSE:LN), Catalent Inc (NYSE:CTLT), NVR, Inc. (NYSE:NVR), HEICO Corporation (NYSE:HEI), Alliant Energy Corporation (NASDAQ:LNT), Extra Space Storage, Inc. (NYSE:EXR), and IDEX Corporation (NYSE:IEX). This group of stocks’ market values match WPC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LN | 8 | 116785 | 1 |
| CTLT | 35 | 490420 | 8 |
| NVR | 39 | 939775 | 5 |
| HEI | 46 | 667415 | 7 |
| LNT | 23 | 377241 | -7 |
| EXR | 27 | 176001 | 11 |
| IEX | 31 | 575412 | -2 |
| Average | 29.9 | 477578 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $478 million. That figure was $94 million in WPC’s case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 8 bullish hedge fund positions. W.P. Carey Inc. (NYSE:WPC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WPC is 55.7. 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 negative signal and 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately WPC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WPC investors were disappointed as the stock returned -2.1% in the third quarter 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
