Hedge Funds Pick Global Payments (GPN) Over Simon Property Group (SPG)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 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 September 30th. In this article we look at what those investors think of Simon Property Group, Inc (NYSE:SPG) and compare it against similarly valued peers like Global Payments (NYSE:GPN).

Simon Property Group, Inc (NYSE:SPG) investors should pay attention to a decrease in support from the world’s most elite money managers of late. SPG was in 25 hedge funds’ portfolios at the end of September. There were 26 hedge funds in our database with SPG positions at the end of the previous quarter. Our calculations also showed that SPG 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.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Steve Cohen of Point72 Asset Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the key hedge fund action surrounding Simon Property Group, Inc (NYSE:SPG).

How have hedgies been trading Simon Property Group, Inc (NYSE:SPG)?

At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SPG over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Simon Property Group, Inc (NYSE:SPG), which was worth $123.2 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $108.5 million worth of shares. AQR Capital Management, GLG Partners, and D E Shaw 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 Gabalex Capital allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 3.57% of its portfolio. Stevens Capital Management is also relatively very bullish on the stock, designating 0.6 percent of its 13F equity portfolio to SPG.

Due to the fact that Simon Property Group, Inc (NYSE:SPG) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Jeffrey Furber’s AEW Capital Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, worth about $233.3 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $69.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Simon Property Group, Inc (NYSE:SPG). These stocks are Global Payments Inc (NYSE:GPN), ServiceNow Inc (NYSE:NOW), Norfolk Southern Corp. (NYSE:NSC), and Prudential Public Limited Company (NYSE:PUK). This group of stocks’ market caps match SPG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.75 hedge funds with bullish positions and the average amount invested in these stocks was $2699 million. That figure was $698 million in SPG’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 11 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the least popular stock in this group but hedge fund interest is still below average. 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 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. Unfortunately SPG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SPG investors were disappointed as the stock returned -1.5% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.