Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Rexford Industrial Realty Inc (NYSE:REXR).
Is Rexford Industrial Realty Inc (NYSE:REXR) ready to rally soon? Hedge funds were becoming hopeful. The number of bullish hedge fund bets rose by 8 in recent months. Rexford Industrial Realty Inc (NYSE:REXR) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistic is 24. Our calculations also showed that REXR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a gander at the latest hedge fund action encompassing Rexford Industrial Realty Inc (NYSE:REXR).
Do Hedge Funds Think REXR Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from the previous quarter. The graph below displays the number of hedge funds with bullish position in REXR over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of Rexford Industrial Realty Inc (NYSE:REXR), with a stake worth $18 million reported as of the end of June. Trailing Millennium Management was Schonfeld Strategic Advisors, which amassed a stake valued at $16.8 million. Balyasny Asset Management, Echo Street Capital Management, and Hill Winds Capital 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 Hill Winds Capital allocated the biggest weight to Rexford Industrial Realty Inc (NYSE:REXR), around 4.98% of its 13F portfolio. Brasada Capital Management is also relatively very bullish on the stock, designating 1.66 percent of its 13F equity portfolio to REXR.
As industrywide interest jumped, some big names have been driving this bullishness. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), created the most valuable position in Rexford Industrial Realty Inc (NYSE:REXR). Schonfeld Strategic Advisors had $16.8 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also initiated a $8 million position during the quarter. The other funds with brand new REXR positions are Daniel Johnson’s Gillson Capital, Michael Gelband’s ExodusPoint Capital, and Matthew L Pinz’s Pinz Capital.
Let’s check out hedge fund activity in other stocks similar to Rexford Industrial Realty Inc (NYSE:REXR). We will take a look at AutoNation, Inc. (NYSE:AN), Cameco Corporation (NYSE:CCJ), Acceleron Pharma Inc (NASDAQ:XLRN), Zhihu Inc. (NYSE:ZH), II-VI, Inc. (NASDAQ:IIVI), Crocs, Inc. (NASDAQ:CROX), and Old Republic International Corporation (NYSE:ORI). This group of stocks’ market values resemble REXR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AN | 24 | 610690 | 0 |
| CCJ | 25 | 587207 | -5 |
| XLRN | 43 | 1579257 | 12 |
| ZH | 10 | 142882 | -13 |
| IIVI | 29 | 274377 | -10 |
| CROX | 40 | 931239 | 9 |
| ORI | 26 | 366916 | 2 |
| Average | 28.1 | 641795 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $642 million. That figure was $128 million in REXR’s case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand Zhihu Inc. (NYSE:ZH) is the least popular one with only 10 bullish hedge fund positions. Rexford Industrial Realty Inc (NYSE:REXR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for REXR is 52.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on REXR as the stock returned 15.5% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
Follow Rexford Industrial Realty Inc. (NYSE:REXR)
Follow Rexford Industrial Realty Inc. (NYSE:REXR)
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Disclosure: None. This article was originally published at Insider Monkey.
