Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Tanger Factory Outlet Centers Inc. (NYSE:SKT) based on that data.
Is SKT a good stock to buy now? Tanger Factory Outlet Centers Inc. (NYSE:SKT) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Tanger Factory Outlet Centers Inc. (NYSE:SKT) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. There were 15 hedge funds in our database with SKT holdings at the end of June. Our calculations also showed that SKT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a glance at the fresh hedge fund action encompassing Tanger Factory Outlet Centers Inc. (NYSE:SKT).
Do Hedge Funds Think SKT Is A Good Stock To Buy Now?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in SKT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Tanger Factory Outlet Centers Inc. (NYSE:SKT), with a stake worth $5.1 million reported as of the end of September. Trailing Renaissance Technologies was Leonard Green & Partners, which amassed a stake valued at $4.2 million. Invenomic Capital Management, Intrinsic Edge Capital, and Invenomic Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Tanger Factory Outlet Centers Inc. (NYSE:SKT), around 2.28% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 1.55 percent of its 13F equity portfolio to SKT.
Since Tanger Factory Outlet Centers Inc. (NYSE:SKT) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that elected to cut their entire stakes in the third quarter. Intriguingly, Ted White and Christopher Kiper’s Legion Partners Asset Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $6.8 million in stock, and Philippe Laffont’s Coatue Management was right behind this move, as the fund cut about $2.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tanger Factory Outlet Centers Inc. (NYSE:SKT) but similarly valued. We will take a look at Playa Hotels & Resorts N.V. (NASDAQ:PLYA), Apogee Enterprises, Inc. (NASDAQ:APOG), Crossamerica Partners LP (NYSE:CAPL), Aurora Cannabis Inc. (NYSE:ACB), FinVolution Group (NYSE:FINV), Ribbon Communications Inc. (NASDAQ:RBBN), and Universal Logistics Holdings, Inc. (NASDAQ:ULH). This group of stocks’ market valuations resemble SKT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLYA | 16 | 259892 | -1 |
| APOG | 12 | 25259 | 2 |
| CAPL | 1 | 165 | 0 |
| ACB | 10 | 9222 | 0 |
| FINV | 5 | 1999 | -4 |
| RBBN | 9 | 20789 | 0 |
| ULH | 10 | 19878 | 1 |
| Average | 9 | 48172 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $24 million in SKT’s case. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 1 bullish hedge fund positions. Tanger Factory Outlet Centers Inc. (NYSE:SKT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SKT is 62.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on SKT as the stock returned 77.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
