Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Simon Property Group, Inc (NYSE:SPG)? The smart money sentiment can provide an answer to this question.
Is SPG stock a buy? Money managers were getting more bullish. The number of bullish hedge fund positions increased by 7 in recent months. Simon Property Group, Inc (NYSE:SPG) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SPG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to take a peek at the recent hedge fund action encompassing Simon Property Group, Inc (NYSE:SPG).
Do Hedge Funds Think SPG Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the third quarter of 2020. On the other hand, there were a total of 26 hedge funds with a bullish position in SPG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Antipodes Partners held the most valuable stake in Simon Property Group, Inc (NYSE:SPG), which was worth $88.1 million at the end of the fourth quarter. On the second spot was Zimmer Partners which amassed $60.8 million worth of shares. Citadel Investment Group, Holocene Advisors, and Adage 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 Antipodes Partners allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 3.83% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, setting aside 1.27 percent of its 13F equity portfolio to SPG.
With a general bullishness amongst the heavyweights, some big names have jumped into Simon Property Group, Inc (NYSE:SPG) headfirst. Zimmer Partners, managed by Stuart J. Zimmer, initiated the biggest position in Simon Property Group, Inc (NYSE:SPG). Zimmer Partners had $60.8 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $32.9 million position during the quarter. The other funds with brand new SPG positions are Jack Woodruff’s Candlestick Capital Management, Geraldine McManus and Andrew Walter’s Granger Management, and Greg Eisner’s Engineers Gate Manager.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Simon Property Group, Inc (NYSE:SPG) but similarly valued. These stocks are McKesson Corporation (NYSE:MCK), AMETEK, Inc. (NYSE:AME), American Water Works Company, Inc. (NYSE:AWK), Discover Financial Services (NYSE:DFS), Southwest Airlines Co. (NYSE:LUV), Corning Incorporated (NYSE:GLW), and Splunk Inc (NASDAQ:SPLK). This group of stocks’ market caps match SPG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCK | 51 | 1768164 | -3 |
| AME | 31 | 956468 | -6 |
| AWK | 36 | 958304 | 5 |
| DFS | 43 | 729763 | -4 |
| LUV | 55 | 757534 | 4 |
| GLW | 39 | 334973 | 3 |
| SPLK | 47 | 1036156 | 3 |
| Average | 43.1 | 934480 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.1 hedge funds with bullish positions and the average amount invested in these stocks was $934 million. That figure was $353 million in SPG’s case. Southwest Airlines Co. (NYSE:LUV) is the most popular stock in this table. On the other hand AMETEK, Inc. (NYSE:AME) is the least popular one with only 31 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SPG is 42.1. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on SPG as the stock returned 36.1% since the end of the fourth quarter (through 4/12) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
