Should You Buy TIER REIT Inc (TIER)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like TIER REIT Inc (NYSE:TIER) .

TIER REIT Inc (NYSE:TIER) shareholders have witnessed an increase in support from the world’s most successful money managers recently. There were 10 hedge funds in our database with TIER holdings at the end of the previous quarter, compared to 11 at the end of Q3. At the end of this article we will also compare TIER to other stocks including Virtusa Corporation (NASDAQ:VRTU), CEVA, Inc. (NASDAQ:CEVA), and Speedway Motorsports, Inc. (NYSE:TRK) to get a better sense of its popularity.

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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With all of this in mind, we’re going to analyze the new action encompassing TIER REIT Inc (NYSE:TIER).

How are hedge funds trading TIER REIT Inc (NYSE:TIER)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2016. On the other hand, there were a total of 3 hedge funds with a bullish position in TIER at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Engine Capital, led by Arnaud Ajdler, holds the number one position in TIER REIT Inc (NYSE:TIER). Engine Capital has a $15 million position in the stock, comprising 13.8% of its 13F portfolio. The second most bullish fund manager is Hawk Ridge Management, led by David Brown, which holds a $10.4 million position; 5.6% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism include John Petry’s Sessa Capital, Stephen Loukas, David A. Lorber, Zachary George’s FrontFour Capital Group and Tim David’s Guardian Point Capital. We should note that two of these hedge funds (Engine Capital and Sessa Capital) 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.

As industrywide interest jumped, specific money managers were breaking ground themselves. Guardian Point Capital, led by Tim David, assembled the biggest position in TIER REIT Inc (NYSE:TIER). Guardian Point Capital had $3.1 million invested in the company at the end of the quarter. Howard Shainker and Akiva Katz’s Bow Street LLC also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington and Bruce Silver’s Silver Capital Management LLC.

Let’s also examine hedge fund activity in other stocks similar to TIER REIT Inc (NYSE:TIER). These stocks are Virtusa Corporation (NASDAQ:VRTU), CEVA, Inc. (NASDAQ:CEVA), Speedway Motorsports, Inc. (NYSE:TRK), and Piper Jaffray Companies (NYSE:PJC). This group of stocks’ market valuations are closest to TIER’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $42 million in TIER’s case. CEVA, Inc. (NASDAQ:CEVA) is the most popular stock in this table. On the other hand Virtusa Corporation (NASDAQ:VRTU) is the least popular one with only 7 bullish hedge fund positions. TIER REIT Inc (NYSE:TIER) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CEVA might be a better candidate to consider taking a long position in.