At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Independence Realty Trust Inc (NYSEMKT:IRT) a buy, sell, or hold? The best stock pickers are betting on the stock. The number of bullish hedge fund positions went up by 6 lately. Our calculations also showed that IRT 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. 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 look at the new hedge fund action surrounding Independence Realty Trust Inc (NYSEMKT:IRT).
What have hedge funds been doing with Independence Realty Trust Inc (NYSEMKT:IRT)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 120% from the second quarter of 2018. By comparison, 11 hedge funds held shares or bullish call options in IRT heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Independence Realty Trust Inc (NYSEMKT:IRT), worth close to $28.8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Ancora Advisors, managed by Frederick DiSanto, which holds a $12 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group, James Dondero’s Highland Capital Management and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Now, key hedge funds were leading the bulls’ herd. Bailard Inc, managed by Thomas Bailard, established the biggest position in Independence Realty Trust Inc (NYSEMKT:IRT). Bailard Inc had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.4 million investment in the stock during the quarter. The other funds with brand new IRT positions are Israel Englander’s Millennium Management, Benjamin A. Smith’s Laurion Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Independence Realty Trust Inc (NYSEMKT:IRT) but similarly valued. We will take a look at CBTX, Inc. (NASDAQ:CBTX), Columbus McKinnon Corporation (NASDAQ:CMCO), Revance Therapeutics Inc (NASDAQ:RVNC), and Codexis, Inc. (NASDAQ:CDXS). All of these stocks’ market caps are closest to IRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBTX | 8 | 26002 | 1 |
| CMCO | 20 | 90248 | 3 |
| RVNC | 11 | 30060 | 2 |
| CDXS | 12 | 235172 | 2 |
| Average | 12.75 | 95371 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $55 million in IRT’s case. Columbus McKinnon Corporation (NASDAQ:CMCO) is the most popular stock in this table. On the other hand CBTX, Inc. (NASDAQ:CBTX) is the least popular one with only 8 bullish hedge fund positions. Independence Realty Trust Inc (NYSEMKT:IRT) 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 CMCO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
