Here is What Hedge Funds Think About Realty Income Corp (O)

Realty Income Corp (NYSE:O) shareholders have witnessed a decrease in hedge fund sentiment recently.

In the eyes of most traders, hedge funds are perceived as unimportant, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey look at the aristocrats of this group, about 450 funds. Most estimates calculate that this group controls most of the smart money’s total asset base, and by monitoring their highest performing picks, we have unearthed a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, positive insider trading sentiment is another way to break down the stock market universe. As the old adage goes: there are a number of reasons for an executive to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the recent action regarding Realty Income Corp (NYSE:O).

What does the smart money think about Realty Income Corp (NYSE:O)?

In preparation for this year, a total of 6 of the hedge funds we track held long positions in this stock, a change of -33% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

Of the funds we track, Millennium Management, managed by Israel Englander, holds the biggest position in Realty Income Corp (NYSE:O). Millennium Management has a $4.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management’s heels is HBK Investments, managed by David Costen Haley, which held a $4 million call position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, and Ken Griffin’s Citadel Investment Group.

Since Realty Income Corp (NYSE:O) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there was a specific group of funds who sold off their entire stakes in Q4. Interestingly, J. Alan Reid, Jr.’s Forward Management dumped the biggest stake of the “upper crust” of funds we track, valued at about $11.1 million in stock.. Robert Emil Zoellner’s fund, Alpine Associates, also said goodbye to its stock, about $4.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds in Q4.

How are insiders trading Realty Income Corp (NYSE:O)?

Insider buying is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time frame, Realty Income Corp (NYSE:O) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Realty Income Corp (NYSE:O). These stocks are DDR Corp (NYSE:DDR), Federal Realty Investment Trust (NYSE:FRT), SL Green Realty Corp (NYSE:SLG), Kimco Realty Corp (NYSE:KIM), and Macerich Co (NYSE:MAC). This group of stocks are the members of the reit – retail industry and their market caps are closest to O’s market cap.

With the returns shown by Insider Monkey’s time-tested strategies, retail investors must always watch hedge fund and insider trading activity, and Realty Income Corp (NYSE:O) applies perfectly to this mantra.

Click here to learn why you should track hedge funds