Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Monmouth R.E. Inv. Corp. (NYSE:MNR).
Monmouth R.E. Inv. Corp. (NYSE:MNR) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of the third quarter of 2016, same as at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Genomic Health, Inc. (NASDAQ:GHDX), Rush Enterprises, Inc. (NASDAQ:RUSHB), and Acorda Therapeutics Inc (NASDAQ:ACOR) to gather more data points.
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What have hedge funds been doing with Monmouth R.E. Inv. Corp. (NYSE:MNR)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in MNR at the beginning of this year, which rose to a peak of 11 by the end of March. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, J. Alan Reid, Jr. of Forward Management holds the largest position in Monmouth R.E. Inv. Corp. (NYSE:MNR). Forward Management has a $16.4 million position in the stock, comprising 1.2% of its 13F portfolio. On Forward Management’s heels is Renaissance Technologies, one of the largest hedge funds in the world, holding a $12 million position. Other hedge funds and institutional investors that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’ AQR Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Forward Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-micro-cap stocks.
We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: PEAK6 Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Springbok Capital).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Monmouth R.E. Inv. Corp. (NYSE:MNR) but similarly valued. These stocks are Genomic Health, Inc. (NASDAQ:GHDX), Rush Enterprises, Inc. (NASDAQ:RUSHB), Acorda Therapeutics Inc (NASDAQ:ACOR), and Trueblue Inc (NYSE:TBI). All of these stocks’ market caps match MNR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GHDX | 19 | 528211 | 0 |
| RUSHB | 4 | 49424 | 0 |
| ACOR | 19 | 268345 | -2 |
| TBI | 11 | 120067 | -4 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $46 million in MNR’s case. Genomic Health, Inc. (NASDAQ:GHDX) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Monmouth R.E. Inv. Corp. (NYSE:MNR) 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. In this regard GHDX or ACOR might be better candidates to consider taking a long position in.
Disclosure: None
