We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like NorthStar Realty Europe Corp. (NYSE:NRE).
NorthStar Realty Europe Corp. (NYSE:NRE) was in 12 hedge funds’ portfolios at the end of the second quarter of 2019. NRE investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 9 hedge funds in our database with NRE positions at the end of the previous quarter. Our calculations also showed that NRE isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers look at the elite of this club, about 750 funds. These hedge fund managers oversee most of the smart money’s total capital, and by observing their highest performing picks, Insider Monkey has revealed many investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the fresh hedge fund action encompassing NorthStar Realty Europe Corp. (NYSE:NRE).
What does smart money think about NorthStar Realty Europe Corp. (NYSE:NRE)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the first quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in NRE a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in NorthStar Realty Europe Corp. (NYSE:NRE) was held by Rima Senvest Management, which reported holding $61.7 million worth of stock at the end of March. It was followed by Shoals Capital Management with a $21.8 million position. Other investors bullish on the company included Balyasny Asset Management, QVT Financial, and AQR Capital Management.
Consequently, key hedge funds have jumped into NorthStar Realty Europe Corp. (NYSE:NRE) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in NorthStar Realty Europe Corp. (NYSE:NRE). Balyasny Asset Management had $5.8 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a $1.5 million position during the quarter. The other funds with brand new NRE positions are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Roger Ibbotson’s Zebra Capital Management.
Let’s check out hedge fund activity in other stocks similar to NorthStar Realty Europe Corp. (NYSE:NRE). These stocks are Forestar Group Inc. (NYSE:FOR), MacroGenics Inc (NASDAQ:MGNX), Adecoagro SA (NYSE:AGRO), and istar Inc (NYSE:STAR). This group of stocks’ market valuations are similar to NRE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOR | 4 | 77243 | -3 |
| MGNX | 19 | 115493 | -4 |
| AGRO | 12 | 184237 | -5 |
| STAR | 5 | 66936 | -4 |
| Average | 10 | 110977 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $100 million in NRE’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 4 bullish hedge fund positions. NorthStar Realty Europe Corp. (NYSE:NRE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on NRE, though not to the same extent, as the stock returned 4.5% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
