Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 20% in 2019 (through September 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 24% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like RPT Realty (NYSE:RPT).
Is RPT Realty (NYSE:RPT) a sound investment right now? Investors who are in the know are getting more optimistic. The number of bullish hedge fund positions advanced by 1 in recent months. Our calculations also showed that RPT isn’t among the 30 most popular stocks among hedge funds (see the video below). RPT was in 9 hedge funds’ portfolios at the end of the second quarter of 2019. There were 8 hedge funds in our database with RPT positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are dozens of indicators investors put to use to analyze their holdings. Two of the most innovative indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the broader indices by a significant amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, 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. We’re going to view the latest hedge fund action encompassing RPT Realty (NYSE:RPT).
What have hedge funds been doing with RPT Realty (NYSE:RPT)?
At Q2’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in RPT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in RPT Realty (NYSE:RPT) was held by Citadel Investment Group, which reported holding $8.5 million worth of stock at the end of March. It was followed by Two Sigma Advisors with a $2 million position. Other investors bullish on the company included Balyasny Asset Management, AQR Capital Management, and Renaissance Technologies.
As one would reasonably expect, some big names were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, created the most outsized position in RPT Realty (NYSE:RPT). D E Shaw had $0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new RPT position is Matthew Tewksbury’s Stevens Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RPT Realty (NYSE:RPT) but similarly valued. We will take a look at NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), Theravance Biopharma Inc (NASDAQ:TBPH), Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS), and Bain Capital Specialty Finance, Inc. (NYSE:BCSF). All of these stocks’ market caps are closest to RPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NGM | 10 | 26704 | 10 |
| TBPH | 8 | 362299 | -1 |
| VLRS | 7 | 105923 | -3 |
| BCSF | 5 | 32152 | 3 |
| Average | 7.5 | 131770 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $14 million in RPT’s case. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 5 bullish hedge fund positions. RPT Realty (NYSE:RPT) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on RPT as the stock returned 13.8% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
