Is Boston Properties, Inc. (BXP) A Good Stock To Buy?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Boston Properties, Inc. (NYSE:BXP).

Boston Properties, Inc. (NYSE:BXP) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. At the end of this article, we will also compare Boston Properties, Inc. (NYSE:BXP) to other stocks, including Sasol Limited (ADR) (NYSE:SSL), Pioneer Natural Resources (NYSE:PXD), and Marriott International Inc (NASDAQ:MAR) to get a better sense of its popularity.

To most market participants, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds with their doors open today, our experts choose to focus on the moguls of this club, about 700 funds. These money managers watch over the majority of all hedge funds’ total asset base, and by tailing their highest performing stock picks, Insider Monkey has deciphered a few investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a peek at the recent action encompassing Boston Properties, Inc. (NYSE:BXP).

What have hedge funds been doing with Boston Properties, Inc. (NYSE:BXP)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 22% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund and institutional investor database, AEW Capital Management, managed by Jeffrey Furber, holds the number one position in Boston Properties, Inc. (NYSE:BXP). AEW Capital Management has a $264 million position in the stock, comprising 6.2% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $114.8 million position; 0.2% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Renaissance Technologies, David Harding’s Winton Capital Management, and John Khoury’s Long Pond Capital.

Seeing as Boston Properties, Inc. (NYSE:BXP) has faced a bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds that slashed their positions entirely last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $23.3 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund cut about $15.7 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Boston Properties, Inc. (NYSE:BXP) but similarly valued. We will take a look at Sasol Limited (ADR) (NYSE:SSL), Pioneer Natural Resources (NYSE:PXD), Marriott International Inc (NASDAQ:MAR), and Applied Materials, Inc. (NASDAQ:AMAT). This group of stocks’ market valuations resembles Boston Properties, Inc. (NYSE:BXP)’s market valuation.

As you can see, these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1.59 billion. That figure was $651 million in Boston Properties, Inc. (NYSE:BXP)’s case. Pioneer Natural Resources (NYSE:PXD) is the most popular stock in this table. On the other hand, Sasol Limited (ADR) (NYSE:SSL) is the least popular one with only 10 bullish hedge fund positions. Boston Properties, Inc. (NYSE:BXP) 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, Pioneer Natural Resources (NYSE:PXD) might be a better candidate to consider a long position.