Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. NASDAQ and Russell 2000 indices were already in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points in the fourth quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Tanger Factory Outlet Centers Inc. (NYSE:SKT).
Is Tanger Factory Outlet Centers Inc. (NYSE:SKT) the right investment to pursue these days? Money managers are taking a bullish view. The number of long hedge fund positions inched up by 3 in recent months. Our calculations also showed that skt isn’t among the 30 most popular stocks among hedge funds. SKT was in 14 hedge funds’ portfolios at the end of December. There were 11 hedge funds in our database with SKT positions at the end of the previous quarter.
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 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 new hedge fund action surrounding Tanger Factory Outlet Centers Inc. (NYSE:SKT).
How are hedge funds trading Tanger Factory Outlet Centers Inc. (NYSE:SKT)?
Heading into the first quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards SKT over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Tanger Factory Outlet Centers Inc. (NYSE:SKT) was held by Millennium Management, which reported holding $28.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $10.2 million position. Other investors bullish on the company included Diamond Hill Capital, Echo Street Capital Management, and Two Sigma Advisors.
As aggregate interest increased, specific money managers have jumped into Tanger Factory Outlet Centers Inc. (NYSE:SKT) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Tanger Factory Outlet Centers Inc. (NYSE:SKT). Point72 Asset Management had $6 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.8 million position during the quarter. The other funds with brand new SKT positions are Michael Gelband’s ExodusPoint Capital, D. E. Shaw’s D E Shaw, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks similar to Tanger Factory Outlet Centers Inc. (NYSE:SKT). These stocks are American Assets Trust, Inc (NYSE:AAT), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), QTS Realty Trust Inc (NYSE:QTS), and Enerplus Corp (NYSE:ERF). This group of stocks’ market valuations are similar to SKT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAT | 14 | 102948 | 3 |
| CCO | 13 | 70697 | 0 |
| QTS | 16 | 316250 | -3 |
| ERF | 18 | 142066 | 1 |
| Average | 15.25 | 157990 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $77 million in SKT’s case. Enerplus Corp (NYSE:ERF) is the most popular stock in this table. On the other hand Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is the least popular one with only 13 bullish hedge fund positions. Tanger Factory Outlet Centers Inc. (NYSE:SKT) 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 SKT wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); SKT investors were disappointed as the stock returned -7.1% 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.
