You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
W.P. Carey Inc. (NYSE:WPC) has seen an increase in hedge fund interest of late. WPC was in 13 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with WPC holdings at the end of the previous quarter. Our calculations also showed that WPC isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action surrounding W.P. Carey Inc. (NYSE:WPC).
Hedge fund activity in W.P. Carey Inc. (NYSE:WPC)
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WPC over the last 15 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the most valuable position in W.P. Carey Inc. (NYSE:WPC), worth close to $20.7 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $11.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise Jeffrey Hinkle’s Shoals Capital Management, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, key money managers have been driving this bullishness. Shoals Capital Management, managed by Jeffrey Hinkle, established the biggest position in W.P. Carey Inc. (NYSE:WPC). Shoals Capital Management had $7.8 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Andre F. Perold’s HighVista Strategies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as W.P. Carey Inc. (NYSE:WPC) but similarly valued. We will take a look at Extra Space Storage, Inc. (NYSE:EXR), Teck Resources Ltd (NYSE:TECK), CenturyLink, Inc. (NYSE:CTL), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks’ market values match WPC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXR | 17 | 162191 | -7 |
| TECK | 27 | 1078134 | 1 |
| CTL | 32 | 1095768 | 1 |
| ABMD | 33 | 1188513 | 2 |
| Average | 27.25 | 881152 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $881 million. That figure was $55 million in WPC’s case. ABIOMED, Inc. (NASDAQ:ABMD) is the most popular stock in this table. On the other hand Extra Space Storage, Inc. (NYSE:EXR) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks W.P. Carey Inc. (NYSE:WPC) is even less popular than EXR. Hedge funds clearly dropped the ball on WPC as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on WPC as the stock returned 9.3% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
