How Smart Money Is Trading Douglas Emmett, Inc. (DEI)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Douglas Emmett, Inc. (NYSE:DEI).

Is Douglas Emmett, Inc. (NYSE:DEI) undervalued? Prominent investors are in an optimistic mood. The number of long hedge fund bets improved by 4 recently. Douglas Emmett, Inc. (NYSE:DEI) was in 12 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with Douglas Emmett, Inc. (NYSE:DEI) positions at the end of the previous 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 Shell Midstream Partners LP (NYSE:SHLX), FNFV Group (NYSE:FNFV), and Murphy Oil Corporation (NYSE:MUR) to gather more data points.

In the eyes of most market participants, hedge funds are seen as slow, old financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this club, about 700 funds. These investment experts oversee the lion’s share of all hedge funds’ total capital, and by shadowing their inimitable picks, Insider Monkey has figured out a number of investment strategies that have historically beaten the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, we’re going to take a peek at the key action surrounding Douglas Emmett, Inc. (NYSE:DEI).

What have hedge funds been doing with Douglas Emmett, Inc. (NYSE:DEI)?

Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 50% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in Douglas Emmett, Inc. (NYSE:DEI). Millennium Management has an $54.7 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Jeffrey Furber of AEW Capital Management, with a $36.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Renaissance Technologies, David S. Winter and David J. Millstone’s 40 North Management, and Steve Pei’s Gratia Capital.

Now, some big names have jumped into Douglas Emmett, Inc. (NYSE:DEI) headfirst. 40 North Management established the largest position in Douglas Emmett, Inc. (NYSE:DEI). 40 North Management had $6.7 million invested in the company at the end of the quarter. Gratia Capital also made a $5.2 million investment in the stock during the quarter. The other funds with brand new Douglas Emmett, Inc. (NYSE:DEI) positions are Millennium Management Subsidiary’s Decade Capital Management, Peter Muller’s PDT Partners, and Chao Ku’s Nine Chapters Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Douglas Emmett, Inc. (NYSE:DEI) but similarly valued. These stocks are Shell Midstream Partners LP (NYSE:SHLX), FNFV Group (NYSE:FNFV), Murphy Oil Corporation (NYSE:MUR), and Watsco Inc (NYSE:WSO). This group of stocks’ market values is similar to Douglas Emmett, Inc. (NYSE:DEI)’s market value.

As you can see, these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $122 million in Douglas Emmett, Inc. (NYSE:DEI)’s case. FNFV Group (NYSE:FNFV) is the most popular stock in this table. On the other hand, Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 10 bullish hedge fund positions. Douglas Emmett, Inc. (NYSE:DEI) 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, FNFV Group (NYSE:FNFV) might be a better candidate to consider a long position.