It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Stag Industrial Inc (NYSE:STAG) during the quarter below.
Stag Industrial Inc (NYSE:STAG) investors should be aware of an increase in hedge fund interest lately. STAG was in 12 hedge funds’ portfolios at the end of December. There were 11 hedge funds in our database with STAG positions at the end of the previous quarter. Our calculations also showed that stag 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the recent hedge fund action encompassing Stag Industrial Inc (NYSE:STAG).
Hedge fund activity in Stag Industrial Inc (NYSE:STAG)
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the second quarter of 2018. By comparison, 11 hedge funds held shares or bullish call options in STAG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Stag Industrial Inc (NYSE:STAG), with a stake worth $63.2 million reported as of the end of September. Trailing Zimmer Partners was Carlson Capital, which amassed a stake valued at $23.5 million. Forward Management, Renaissance Technologies, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers were leading the bulls’ herd. Zimmer Partners, managed by Stuart J. Zimmer, assembled the biggest position in Stag Industrial Inc (NYSE:STAG). Zimmer Partners had $63.2 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $0.4 million position during the quarter. The only other fund with a brand new STAG position is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Stag Industrial Inc (NYSE:STAG). We will take a look at Energizer Holdings, Inc. (NYSE:ENR), Science Applications International Corp (NYSE:SAIC), Old National Bancorp (NASDAQ:ONB), and Corelogic Inc (NYSE:CLGX). All of these stocks’ market caps resemble STAG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENR | 21 | 242691 | -5 |
| SAIC | 24 | 192455 | 0 |
| ONB | 7 | 29032 | 1 |
| CLGX | 19 | 264131 | -1 |
| Average | 17.75 | 182077 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $115 million in STAG’s case. Science Applications International Corp (NYSE:SAIC) is the most popular stock in this table. On the other hand Old National Bancorp (NASDAQ:ONB) is the least popular one with only 7 bullish hedge fund positions. Stag Industrial Inc (NYSE:STAG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately STAG wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); STAG investors were disappointed as the stock returned 15.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
