Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is QTS Realty Trust Inc (NYSE:QTS) the right pick for your portfolio? The best stock pickers are in a bearish mood. The number of bullish hedge fund positions decreased by 1 recently. QTS was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 16 hedge funds in our database with QTS positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Criteo SA (ADR) (NASDAQ:CRTO), Tenneco Inc (NYSE:TEN), and PDC Energy Inc (NASDAQ:PDCE) to gather more data points.
Follow Qts Realty Trust Inc. (NYSE:QTS)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with QTS Realty Trust Inc (NYSE:QTS)?
Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in QTS over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Amit Nitin Doshi’s Harbor Spring Capital has the largest position in QTS Realty Trust Inc (NYSE:QTS), worth close to $29.9 million, amounting to 5.8% of its total 13F portfolio. On Harbor Spring Capital’s heels is Land & Buildings Investment Management, led by Jonathan Litt, which holds a $19.6 million position; the fund has 5% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Ken Heebner’s Capital Growth Management, Stuart J. Zimmer’s Zimmer Partners and Israel Englander’s Millennium Management. We should note that Zimmer Partners is 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.
Due to the fact that QTS Realty Trust Inc (NYSE:QTS) has experienced bearish sentiment from hedge fund managers, we can see that there was a specific group of money managers that slashed their entire stakes last quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management dumped the biggest stake of all the hedgies studied by Insider Monkey, valued at about $4 million in stock, and Dan Sobol and Lisa Hess’ SkyTop Capital Management was right behind this move, as the fund said goodbye to about $1.7 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to QTS Realty Trust Inc (NYSE:QTS). These stocks are Criteo SA (ADR) (NASDAQ:CRTO), Tenneco Inc (NYSE:TEN), PDC Energy Inc (NASDAQ:PDCE), and LaSalle Hotel Properties (NYSE:LHO). This group of stocks’ market caps resemble QTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRTO | 13 | 132910 | 0 |
| TEN | 24 | 201461 | -3 |
| PDCE | 22 | 278279 | 5 |
| LHO | 13 | 21906 | -1 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $102 million in QTS’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand Criteo SA (ADR) (NASDAQ:CRTO) is the least popular one with only 13 bullish hedge fund positions. QTS Realty Trust Inc (NYSE:QTS) 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 TEN might be a better candidate to consider taking a long position in.
Disclosure: None
