Regency Centers Corp (REG): Hedge Funds Are Buying, Should You?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Regency Centers Corp (NYSE:REG).

Is Regency Centers Corp (NYSE:REG) worth your attention right now? Prominent investors are taking a bearish view. The number of bullish hedge fund bets shrunk by 2 lately. Regency Centers Corp (NYSE:REG) was in 7 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with Regency Centers Corp (NYSE:REG) holdings at the end of the previous quarter. At the end of this article, we will also compare Regency Centers Corp (NYSE:REG) to other stocks, including Columbia Pipeline Group Inc (NYSE:CPGX), Lamar Advertising Co (NASDAQ:LAMR), and A. O. Smith Corporation (NYSE:AOS) to get a better sense of its popularity.

To most stock holders, hedge funds are seen as underperforming, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, We hone in on the top tier of this group, approximately 700 funds. These money managers control the bulk of the hedge fund industry’s total capital, and by watching their matchless stock picks, Insider Monkey has brought to light a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, let’s take a gander at the fresh action encompassing Regency Centers Corp (NYSE:REG).

What does the smart money think about Regency Centers Corp (NYSE:REG)?

At the end of Q3, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 22% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Regency Centers Corp (NYSE:REG). Millennium Management has a $39.7 million position in the stock, comprising 0.1% of its 13F portfolio. On Millennium Management’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $4.6 million position; less than 0.1% of its 13F portfolio is allocated to the company. Hedge funds and other institutional investors that are bullish encompass Cliff Asness’ AQR Capital Management, Greg Poole’s Echo Street Capital Management, and Renaissance Technologies.

Seeing as Regency Centers Corp (NYSE:REG) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that elected to cut their positions entirely heading into Q4. At the top of the heap, Matthew Tewksbury’s Stevens Capital Management cut the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $5.2 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund cut about $2.2 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q4.

Let’s check out the hedge fund activity in other stocks similar to Regency Centers Corp (NYSE:REG). We will take a look at Columbia Pipeline Group Inc (NYSE:CPGX), Lamar Advertising Co (NASDAQ:LAMR), A. O. Smith Corporation (NYSE:AOS), and Apartment Investment and Management Co. (NYSE:AIV). This group of stocks’ market values resembles Regency Centers Corp (NYSE:REG)’s market value.

As you can see, these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $55 million in Regency Centers Corp (NYSE:REG)’s case. A. O. Smith Corporation (NYSE:AOS) is the most popular stock in this table. On the other hand, Apartment Investment and Management Co. (NYSE:AIV) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks, Regency Centers Corp (NYSE:REG) is even less popular than Apartment Investment and Management Co. (NYSE:AIV). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.