We can judge whether Tanger Factory Outlet Centers Inc. (NYSE:SKT) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Tanger Factory Outlet Centers Inc. (NYSE:SKT) has experienced a decrease in enthusiasm from smart money in recent months. SKT was in 14 hedge funds’ portfolios at the end of June. There were 15 hedge funds in our database with SKT positions at the end of the previous quarter. Our calculations also showed that SKT 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.
Why do we pay any attention at all to hedge fund sentiment? 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. Let’s check out the recent hedge fund action regarding Tanger Factory Outlet Centers Inc. (NYSE:SKT).
What have hedge funds been doing with Tanger Factory Outlet Centers Inc. (NYSE:SKT)?
At Q2’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the first quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in SKT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Tanger Factory Outlet Centers Inc. (NYSE:SKT), worth close to $23.9 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $19.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Noam Gottesman’s GLG Partners, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.
Due to the fact that Tanger Factory Outlet Centers Inc. (NYSE:SKT) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their entire stakes by the end of the second quarter. Intriguingly, Greg Poole’s Echo Street Capital Management sold off the biggest position of all the hedgies tracked by Insider Monkey, worth an estimated $8.4 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $5.1 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds by the end of the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tanger Factory Outlet Centers Inc. (NYSE:SKT) but similarly valued. We will take a look at Hailiang Education Group Inc. (NASDAQ:HLG), Group 1 Automotive, Inc. (NYSE:GPI), McGrath RentCorp (NASDAQ:MGRC), and SFL Corporation Ltd. (NYSE:SFL). This group of stocks’ market caps match SKT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLG | 2 | 6378 | -1 |
| GPI | 13 | 153111 | 0 |
| MGRC | 18 | 141319 | -4 |
| SFL | 11 | 36180 | 5 |
| Average | 11 | 84247 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $86 million in SKT’s case. McGrath RentCorp (NASDAQ:MGRC) is the most popular stock in this table. On the other hand Hailiang Education Group Inc. (NASDAQ:HLG) is the least popular one with only 2 bullish hedge fund positions. Tanger Factory Outlet Centers Inc. (NYSE:SKT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately SKT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SKT were disappointed as the stock returned -2.4% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
