Hedge funds are known to underperform the bull markets but that’s not because they are bad at investing. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. Hedge funds underperform because they are hedged. The Standard and Poor’s 500 Index returned approximately 12.1% in the first 5 months of this year through May 30th (including dividend payments). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the same 5-month period. An average long/short hedge fund returned only a fraction of this due to the hedges they implement and the large fees they charge. Our research covering the last 18 years indicates that investors can outperform the market by imitating hedge funds’ stock picks rather than directly investing in hedge funds. 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 Regency Centers Corp (NASDAQ:REG).
Regency Centers Corp (NASDAQ:REG) has seen an increase in hedge fund interest recently. REG was in 17 hedge funds’ portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with REG positions at the end of the previous quarter. Our calculations also showed that reg isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the latest hedge fund action regarding Regency Centers Corp (NASDAQ:REG).
What have hedge funds been doing with Regency Centers Corp (NASDAQ:REG)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards REG over the last 15 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Regency Centers Corp (NASDAQ:REG) was held by Renaissance Technologies, which reported holding $134.3 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $68.5 million position. Other investors bullish on the company included D E Shaw, Capital Growth Management, and Echo Street Capital Management.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Capital Growth Management, managed by Ken Heebner, created the largest position in Regency Centers Corp (NASDAQ:REG). Capital Growth Management had $34.8 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also made a $8.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, David Harding’s Winton Capital Management, and Minhua Zhang’s Weld Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Regency Centers Corp (NASDAQ:REG). We will take a look at Zebra Technologies Corporation (NASDAQ:ZBRA), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Kohl’s Corporation (NYSE:KSS), and Yandex NV (NASDAQ:YNDX). This group of stocks’ market caps are closest to REG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZBRA | 35 | 1101221 | 6 |
| IONS | 22 | 236032 | 1 |
| KSS | 27 | 1188592 | 0 |
| YNDX | 30 | 843757 | 7 |
| Average | 28.5 | 842401 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $842 million. That figure was $397 million in REG’s case. Zebra Technologies Corporation (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Regency Centers Corp (NASDAQ:REG) is even less popular than IONS. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on REG, though not to the same extent, as the stock returned 4.3% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
