The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Washington Real Estate Investment Trust (NYSE:WRE) from the perspective of those elite funds.
Washington Real Estate Investment Trust (NYSE:WRE) was in 14 hedge funds’ portfolios at the end of the fourth quarter of 2018. WRE has experienced an increase in support from the world’s most elite money managers lately. There were 8 hedge funds in our database with WRE holdings at the end of the previous quarter. Our calculations also showed that wre isn’t among the 30 most popular stocks among hedge funds.
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 fresh hedge fund action surrounding Washington Real Estate Investment Trust (NYSE:WRE).
What have hedge funds been doing with Washington Real Estate Investment Trust (NYSE:WRE)?
At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in WRE over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the most valuable position in Washington Real Estate Investment Trust (NYSE:WRE), worth close to $55.9 million, comprising 0.1% of its total 13F portfolio. Coming in second is AEW Capital Management, led by Jeffrey Furber, holding a $27.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
As aggregate interest increased, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in Washington Real Estate Investment Trust (NYSE:WRE). Millennium Management had $4.3 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.9 million position during the quarter. The other funds with brand new WRE positions are Matthew Tewksbury’s Stevens Capital Management, Ray Dalio’s Bridgewater Associates, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Washington Real Estate Investment Trust (NYSE:WRE) but similarly valued. These stocks are NetScout Systems, Inc. (NASDAQ:NTCT), Pattern Energy Group Inc (NASDAQ:PEGI), Groupon Inc (NASDAQ:GRPN), and AAON, Inc. (NASDAQ:AAON). This group of stocks’ market valuations are similar to WRE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTCT | 14 | 92846 | 2 |
| PEGI | 11 | 18611 | 2 |
| GRPN | 24 | 351874 | -8 |
| AAON | 6 | 4259 | 1 |
| Average | 13.75 | 116898 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $96 million in WRE’s case. Groupon Inc (NASDAQ:GRPN) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 6 bullish hedge fund positions. Washington Real Estate Investment Trust (NYSE:WRE) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on WRE, though not to the same extent, as the stock returned 20% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
