Is Rexford Industrial Realty Inc (REXR) A Good Stock To Buy?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Rexford Industrial Realty Inc (NYSE:REXR) .

Rexford Industrial Realty Inc (NYSE:REXR) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. 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 LegacyTexas Financial Group Inc (NASDAQ:LTXB), Waddell & Reed Financial, Inc. (NYSE:WDR), and The Empire District Electric Company (NYSE:EDE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, let’s analyze the new action encompassing Rexford Industrial Realty Inc (NYSE:REXR).

Hedge fund activity in Rexford Industrial Realty Inc (NYSE:REXR)

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. The graph below displays the number of hedge funds with bullish position in REXR over the last 5 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, AEW Capital Management, led by Jeffrey Furber, holds the biggest position in Rexford Industrial Realty Inc (NYSE:REXR). According to regulatory filings, the fund has a $94.1 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Millennium Management, one of the largest hedge funds in the world, which oversees a $29.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Michael Swotes’s Castle Ridge Investment Management, Glenn Russell Dubin’s Highbridge Capital Management and Richard Driehaus’s Driehaus Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since Rexford Industrial Realty Inc (NYSE:REXR) has experienced no change in interest from the aggregate hedge fund industry, we check to see if there is a specific group of fund managers who sold off their positions entirely heading into Q4. At the top of the heap, Jacob Gottlieb’s Visium Asset Management dropped the largest position of all the hedgies followed by Insider Monkey, worth an estimated $3 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, having dropped $2,000 worth of shares.

Let’s now review hedge fund activity in other stocks similar to Rexford Industrial Realty Inc (NYSE:REXR). These stocks are LegacyTexas Financial Group Inc (NASDAQ:LTXB), Waddell & Reed Financial, Inc. (NYSE:WDR), The Empire District Electric Company (NYSE:EDE), and Banner Corporation (NASDAQ:BANR). All of these stocks’ market caps resemble REXR’s market cap.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $146 million in REXR’s case. LegacyTexas Financial Group Inc (NASDAQ:LTXB) is the most popular stock in this table. On the other hand The Empire District Electric Company (NYSE:EDE) is the least popular one with only 7 bullish hedge fund positions. Rexford Industrial Realty Inc (NYSE:REXR) 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 LTXB might be a better candidate to consider taking a long position in.

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Disclosure: none.