Looking for high-potential stocks? 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 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ 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 Select Income REIT (NASDAQ:SIR) .
Select Income REIT (NASDAQ:SIR) investors should pay attention to a decrease in support from the world’s most successful money managers in recent months. There were 14 hedge funds in our database with SIR positions 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 First Financial Bankshares Inc (NASDAQ:FFIN), Lithia Motors Inc (NYSE:LAD), and Summit Materials Inc (NYSE:SUM) to gather more data points.
Follow Select Income Reit (NASDAQ:SIR)
Follow Select Income Reit (NASDAQ:SIR)
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.
Aleksandr Bagri/Shutterstock.com
With all of this in mind, we’re going to go over the recent action surrounding Select Income REIT (NASDAQ:SIR).
What does the smart money think about Select Income REIT (NASDAQ:SIR)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards SIR over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Select Income REIT (NASDAQ:SIR). Arrowstreet Capital has a $13.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Forward Management, led by J. Alan Reid, Jr., which holds a $13.5 million position; 1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise Greg Poole’s Echo Street Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and Cliff Asness’ AQR Capital Management. We should note that Forward Management is 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.
