Lexington Realty Trust (LXP): Are Hedge Funds Right About This Stock?

Lexington Realty Trust (NYSE:LXP) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. LXP investors should pay attention to an increase in enthusiasm from smart money lately. There were 14 hedge funds in our database with LXP positions at the end of the previous quarter.

To most traders, hedge funds are seen as slow, old financial vehicles of years past. While there are more than 8000 funds with their doors open at present, we look at the crème de la crème of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by watching their highest performing picks, we have discovered a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as beneficial, positive insider trading activity is a second way to break down the world of equities. There are lots of stimuli for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if shareholders know where to look (learn more here).

Now, we’re going to take a peek at the key action surrounding Lexington Realty Trust (NYSE:LXP).

What have hedge funds been doing with Lexington Realty Trust (NYSE:LXP)?

At Q1’s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of 7% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly.

Of the funds we track, J. Alan Reid, Jr.’s Forward Management had the biggest position in Lexington Realty Trust (NYSE:LXP), worth close to $34.1 million, comprising 2.1% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $20.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include J. Alan Reid, Jr.’s Forward Management, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.

Consequently, some big names were breaking ground themselves. Pine River Capital Management, managed by Brian Taylor, initiated the largest position in Lexington Realty Trust (NYSE:LXP). Pine River Capital Management had 1.7 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.9 million position during the quarter. The other funds with brand new LXP positions are Paul Tudor Jones’s Tudor Investment Corp, Matthew Tewksbury’s Stevens Capital Management, and David Costen Haley’s HBK Investments.

How are insiders trading Lexington Realty Trust (NYSE:LXP)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last six-month time period, Lexington Realty Trust (NYSE:LXP) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Lexington Realty Trust (NYSE:LXP). These stocks are Redwood Trust, Inc. (NYSE:RWT), Chimera Investment Corporation (NYSE:CIM), PS Business Parks Inc (NYSE:PSB), Brandywine Realty Trust (NYSE:BDN), and Newcastle Investment Corp. (NYSE:NCT). This group of stocks are in the reit – diversified industry and their market caps are closest to LXP’s market cap.

With the returns demonstrated by our time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Lexington Realty Trust (NYSE:LXP) is no exception.

Click here to learn why you should track hedge funds