Should You Add Gramercy Property Trust (GPT) to Your Portfolio?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Gramercy Property Trust (NYSE:GPT) worth your attention right now? The smart money seems to be reducing their bets on the stock. The number of long hedge fund positions that are disclosed in regulatory 13F filings inched down by one during the third quarter. In this way there were 13 funds in our database with GPT positions at the end of September. At the end of this article we will also compare GPT to other stocks including Hill-Rom Holdings, Inc. (NYSE:HRC), Nuance Communications Inc. (NASDAQ:NUAN), and DCP Midstream Partners, LP (NYSE:DPM) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Now, we’re going to view the new action encompassing Gramercy Property Trust (NYSE:GPT).

What does the smart money think about Gramercy Property Trust (NYSE:GPT)?

At the end of the third quarter, 13 funds tracked by Insider Monkey were bullish on this stock, down by 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GPT over the last five 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, AEW Capital Management, led by Jeffrey Furber, holds the number one position in Gramercy Property Trust (NYSE:GPT). AEW Capital Management has a $111.4 million position in the stock, comprising 2.3% of its 13F portfolio. The second most bullish fund manager is Eduardo Abush’s Waterfront Capital Partners, which holds a $23 million position; 3.3% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism comprise Greg Poole’s Echo Street Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. It’s worth mentioning that Ken Heebner’s Capital Growth Management got rid of the largest investment of all the investors monitored by Insider Monkey, comprising an estimated $48.7 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $36.3 million worth.

Let’s check out hedge fund activity in other stocks similar to Gramercy Property Trust (NYSE:GPT). These stocks are Hill-Rom Holdings, Inc. (NYSE:HRC), Nuance Communications Inc. (NASDAQ:NUAN), DCP Midstream Partners, LP (NYSE:DPM), and Urban Outfitters, Inc. (NASDAQ:URBN). This group of stocks’ market values are similar to GPT’s market value.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $342 million, versus $192 million in GPT’s case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand DCP Midstream Partners, LP (NYSE:DPM) is the least popular one with only eight bullish hedge fund positions. Gramercy Property Trust (NYSE:GPT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Hill-Rom Holdings, Inc. (NYSE:HRC) might be a better candidate to consider taking a long position in.

Disclosure: none