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 (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Brixmor Property Group Inc (NYSE:BRX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Brixmor Property Group Inc (NYSE:BRX) a buy, sell, or hold? The best stock pickers are taking a bearish view. The number of long hedge fund positions decreased by 1 lately. Our calculations also showed that BRX 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).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 41 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Richard Driehaus of Driehaus Capital
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. Now we’re going to take a look at the fresh hedge fund action encompassing Brixmor Property Group Inc (NYSE:BRX).
How are hedge funds trading Brixmor Property Group Inc (NYSE:BRX)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BRX over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Brixmor Property Group Inc (NYSE:BRX), worth close to $92 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Carlson Capital, led by Clint Carlson, holding a $16.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers with similar optimism contain David Harding’s Winton Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Brixmor Property Group Inc (NYSE:BRX), around 0.62% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, setting aside 0.29 percent of its 13F equity portfolio to BRX.
Due to the fact that Brixmor Property Group Inc (NYSE:BRX) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, worth about $4 million in stock, and Matthew Crandall Gilman’s Hill Winds Capital was right behind this move, as the fund said goodbye to about $3.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Brixmor Property Group Inc (NYSE:BRX). These stocks are InterXion Holding NV (NYSE:INXN), Flex Ltd. (NASDAQ:FLEX), Jefferies Financial Group Inc. (NYSE:JEF), and Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR). This group of stocks’ market caps resemble BRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INXN | 60 | 1328786 | 27 |
| FLEX | 34 | 1581224 | 0 |
| JEF | 31 | 720328 | -3 |
| ARWR | 26 | 259366 | 11 |
| Average | 37.75 | 972426 | 8.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.75 hedge funds with bullish positions and the average amount invested in these stocks was $972 million. That figure was $147 million in BRX’s case. InterXion Holding NV (NYSE:INXN) is the most popular stock in this table. On the other hand Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Brixmor Property Group Inc (NYSE:BRX) is even less popular than ARWR. Hedge funds dodged a bullet by taking a bearish stance towards BRX. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately BRX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BRX investors were disappointed as the stock returned -42% during the same time period 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 so far 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.
