Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Liberty Property Trust (NYSE:LPT)? The smart money sentiment can provide an answer to this question.
Liberty Property Trust (NYSE:LPT) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the second quarter of 2019. 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 Etsy Inc (NASDAQ:ETSY), Guardant Health, Inc. (NASDAQ:GH), and American Homes 4 Rent (NYSE:AMH) to gather more data points. Our calculations also showed that LPT isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the masters of this group, approximately 750 funds. These hedge fund managers have their hands on the majority of the smart money’s total asset base, and by watching their inimitable picks, Insider Monkey has unearthed various investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the key hedge fund action surrounding Liberty Property Trust (NYSE:LPT).
What does smart money think about Liberty Property Trust (NYSE:LPT)?
Heading into the third quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LPT over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the largest position in Liberty Property Trust (NYSE:LPT). Zimmer Partners has a $179.5 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Long Pond Capital, managed by John Khoury, which holds a $37.2 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Clint Carlson’s Carlson Capital, Jonathan Litt’s Land & Buildings Investment Management and Renaissance Technologies.
Because Liberty Property Trust (NYSE:LPT) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds that decided to sell off their positions entirely last quarter. Interestingly, Benjamin A. Smith’s Laurion Capital Management said goodbye to the largest stake of all the hedgies watched by Insider Monkey, comprising close to $1.7 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dropped about $1.5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Liberty Property Trust (NYSE:LPT). These stocks are Etsy Inc (NASDAQ:ETSY), Guardant Health, Inc. (NASDAQ:GH), American Homes 4 Rent (NYSE:AMH), and Galapagos NV (NASDAQ:GLPG). This group of stocks’ market valuations match LPT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETSY | 41 | 1228455 | 2 |
| GH | 19 | 225721 | 5 |
| AMH | 25 | 454005 | 6 |
| GLPG | 14 | 97279 | -2 |
| Average | 24.75 | 501365 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $338 million in LPT’s case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Galapagos NV (NASDAQ:GLPG) is the least popular one with only 14 bullish hedge fund positions. Liberty Property Trust (NYSE:LPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on LPT, though not to the same extent, as the stock returned 3.4% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
