The elite funds run by legendary investors such as Dan Loeb and David Tepper 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 incentive 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 Corporate Office Properties Trust (NYSE:OFC) from the perspective of those elite funds.
Corporate Office Properties Trust (NYSE:OFC) has experienced a decrease in enthusiasm from smart money in recent months. Our calculations also showed that OFC isn’t among the 30 most popular stocks among hedge funds.
According to most shareholders, hedge funds are assumed to be underperforming, outdated investment vehicles of yesteryear. While there are over 8,000 funds in operation at the moment, Our experts hone in on the moguls of this club, around 700 funds. These investment experts have their hands on the lion’s share of all hedge funds’ total capital, and by keeping track of their first-class stock picks, Insider Monkey has brought to light many investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s check out the recent hedge fund action surrounding Corporate Office Properties Trust (NYSE:OFC).
What does the smart money think about Corporate Office Properties Trust (NYSE:OFC)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OFC over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Corporate Office Properties Trust (NYSE:OFC) was held by Millennium Management, which reported holding $43.3 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $17.4 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Balyasny Asset Management.
Judging by the fact that Corporate Office Properties Trust (NYSE:OFC) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of money managers that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Eduardo Abush’s Waterfront Capital Partners dropped the biggest position of the 700 funds followed by Insider Monkey, valued at about $8.8 million in stock, and Mike Vranos’s Ellington was right behind this move, as the fund cut about $0.7 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Corporate Office Properties Trust (NYSE:OFC) but similarly valued. These stocks are Silgan Holdings Inc. (NASDAQ:SLGN), Physicians Realty Trust (NYSE:DOC), SkyWest, Inc. (NASDAQ:SKYW), and The Geo Group, Inc. (NYSE:GEO). This group of stocks’ market valuations resemble OFC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLGN | 12 | 100655 | -1 |
| DOC | 9 | 72284 | -1 |
| SKYW | 14 | 157798 | 2 |
| GEO | 17 | 107139 | 5 |
| Average | 13 | 109469 | 1.25 |
View table here if you experience formatting issues.
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 $109 million. That figure was $91 million in OFC’s case. The Geo Group, Inc. (NYSE:GEO) is the most popular stock in this table. On the other hand Physicians Realty Trust (NYSE:DOC) is the least popular one with only 9 bullish hedge fund positions. Corporate Office Properties Trust (NYSE:OFC) 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 GEO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
