Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Public Storage (NYSE:PSA) a buy, sell, or hold? The smart money is taking a bearish view. The number of long hedge fund positions shrunk by 1 lately. PSA was in 21 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with PSA positions at the end of the previous quarter. At the end of this article we will also compare PSA to other stocks including PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), LIBERTY GLOBAL PLC (NASDAQ:LBTYK), and Delta Air Lines, Inc. (NYSE:DAL) to get a better sense of its popularity.
Follow Public Storage (NYSE:PSA)
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To most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are more than an 8000 funds trading at the moment, Our researchers look at the upper echelon of this club, about 700 funds. These hedge fund managers preside over the majority of the smart money’s total capital, and by monitoring their top stock picks, Insider Monkey has spotted several investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s check out the recent action regarding Public Storage (NYSE:PSA).
How have hedgies been trading Public Storage (NYSE:PSA)?
Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AEW Capital Management, managed by Jeffrey Furber, holds the most valuable position in Public Storage (NYSE:PSA). AEW Capital Management has a $283.9 million position in the stock, comprising 6.6% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $77.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Cliff Asness’s AQR Capital Management, Ken Heebner’s Capital Growth Management and Phill Gross and Robert Atchinson’s Adage Capital Management.
Seeing as Public Storage (NYSE:PSA) has faced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies who sold off their entire stakes in the third quarter. It’s worth mentioning that Matthew Tewksbury’s Stevens Capital Management cut the largest position of all the hedgies followed by Insider Monkey, comprising close to $7.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $5.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Public Storage (NYSE:PSA). We will take a look at PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), LIBERTY GLOBAL PLC (NASDAQ:LBTYK), Delta Air Lines, Inc. (NYSE:DAL), and JD.Com Inc (ADR) (NASDAQ:JD). This group of stocks’ market caps are similar to PSA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QQQ | 23 | 852206 | 2 |
| LBTYK | 89 | 8277984 | 1 |
| DAL | 109 | 7318759 | -5 |
| JD | 71 | 9101669 | -4 |
As you can see these stocks had an average of 73 hedge funds with bullish positions and the average amount invested in these stocks was $6.39 billion. That figure was $653 million in PSA’s case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table, while PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Public Storage (NYSE:PSA) is even less popular than QQQ. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is required.
