Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets, hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards National Retail Properties, Inc. (NYSE:NNN).
National Retail Properties, Inc. (NYSE:NNN) was in 16 hedge funds’ portfolios at the end of September. NNN has seen a decrease in enthusiasm from smart money lately. There were 17 hedge funds in our database with NNN holdings 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 People’s United Financial, Inc. (NASDAQ:PBCT), Live Nation Entertainment, Inc. (NYSE:LYV), and Silver Wheaton Corp. (USA) (NYSE:SLW) to gather more data points.
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At the moment there are several signals investors can use to evaluate stocks. Some of the most innovative signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a solid margin (see the details here).
Keeping this in mind, we’re going to take a look at the key action surrounding National Retail Properties, Inc. (NYSE:NNN).
What does the smart money think about National Retail Properties, Inc. (NYSE:NNN)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 6% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the number one position in National Retail Properties, Inc. (NYSE:NNN), worth close to $75.4 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Fisher Asset Management, run by Ken Fisher, which holds a $33.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Ken Griffin’s Citadel Investment Group, and Jeffrey Furber’s AEW Capital Management.
Due to the fact that National Retail Properties, Inc. (NYSE:NNN) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there exists a select few hedge funds that slashed their full holdings last quarter. Interestingly, Peter Muller’s PDT Partners cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $1.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its holding, about $1.2 million worth of shares. These moves are interesting, as aggregate hedge fund interest was cut by 1 fund last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as National Retail Properties, Inc. (NYSE:NNN) but similarly valued. These stocks are People’s United Financial, Inc. (NASDAQ:PBCT), Live Nation Entertainment, Inc. (NYSE:LYV), Silver Wheaton Corp. (USA) (NYSE:SLW), and ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS). This group of stocks’ market valuations match NNN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PBCT | 10 | 55674 | -2 |
| LYV | 28 | 577396 | -8 |
| SLW | 21 | 204279 | -1 |
| ISIS | 21 | 94251 | -5 |
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 $233 million. That figure was $197 million in NNN’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand People’s United Financial, Inc. (NASDAQ:PBCT) is the least popular one with only 10 bullish hedge fund positions. National Retail Properties, Inc. (NYSE:NNN) 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 LYV might be a better candidate to consider a long position.
