Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. At Insider Monkey, we pore over the filings of nearly 835 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Corporate Office Properties Trust (NYSE:OFC) makes for a good investment right now.
Corporate Office Properties Trust (NYSE:OFC) was in 21 hedge funds’ portfolios at the end of the fourth quarter of 2019. OFC has seen an increase in activity from the world’s largest hedge funds in recent months. There were 18 hedge funds in our database with OFC holdings at the end of the previous quarter. Our calculations also showed that OFC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To most shareholders, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds trading today, Our researchers choose to focus on the masters of this group, about 850 funds. It is estimated that this group of investors watch over the majority of the hedge fund industry’s total capital, and by tracking their finest picks, Insider Monkey has determined many investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the fresh hedge fund action regarding Corporate Office Properties Trust (NYSE:OFC).
What does smart money think about Corporate Office Properties Trust (NYSE:OFC)?
At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OFC over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the most valuable position in Corporate Office Properties Trust (NYSE:OFC), worth close to $81.2 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Winton Capital Management, led by David Harding, holding a $16.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to Corporate Office Properties Trust (NYSE:OFC), around 0.85% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.36 percent of its 13F equity portfolio to OFC.
Now, key money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, created the biggest position in Corporate Office Properties Trust (NYSE:OFC). GLG Partners had $2.5 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Parvinder Thiara’s Athanor Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Corporate Office Properties Trust (NYSE:OFC) but similarly valued. These stocks are BancorpSouth, Inc. (NYSE:BXS), Home Bancshares Inc (NASDAQ:HOMB), WNS (Holdings) Limited (NYSE:WNS), and Manchester United PLC (NYSE:MANU). This group of stocks’ market caps match OFC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BXS | 14 | 63010 | 0 |
| HOMB | 12 | 14017 | 0 |
| WNS | 20 | 227803 | 1 |
| MANU | 10 | 35986 | -2 |
| Average | 14 | 85204 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $165 million in OFC’s case. WNS (Holdings) Limited (NYSE:WNS) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Corporate Office Properties Trust (NYSE:OFC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately OFC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on OFC were disappointed as the stock returned -27.6% during the first two and a half months of 2020 (through March 25th) 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
