Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Vornado Realty Trust (NYSE:VNO) a buy here? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets moved up by 3 lately. 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 Intuitive Surgical, Inc. (NASDAQ:ISRG), Macy’s, Inc. (NYSE:M), and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) to gather more data points.
Follow Vornado Realty Trust (NYSE:VNO)
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With all of this in mind, we’re going to go over the fresh action regarding Vornado Realty Trust (NYSE:VNO).
What have hedge funds been doing with Vornado Realty Trust (NYSE:VNO)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Martin Whitman’s Third Avenue Management has the biggest position in Vornado Realty Trust (NYSE:VNO), worth close to $119.1 million, comprising 3.2% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which holds a $90.4 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions include John Khoury’s Long Pond Capital, AEW Capital Management and Israel Englander’s Millennium Management.
As aggregate interest increased, specific money managers have been driving this bullishness. Long Pond Capital, managed by John Khoury, created the most outsized position in Vornado Realty Trust (NYSE:VNO). Long Pond Capital had $54.4 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $29.9 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vornado Realty Trust (NYSE:VNO) but similarly valued. We will take a look at Intuitive Surgical, Inc. (NASDAQ:ISRG), Macy’s, Inc. (NYSE:M), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market valuations are closest to VNO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ISRG | 34 | 961959 | 2 |
| M | 67 | 1592888 | 6 |
| BMRN | 50 | 1742311 | 1 |
| HRL | 15 | 192187 | -6 |
As you can see these stocks had an average of 41.5 hedge funds with bullish positions and the average amount invested in these stocks was $1122 million. That figure was $529 million in VNO’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 15 bullish hedge fund positions. Vornado Realty Trust (NYSE:VNO) 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 M might be a better candidate to consider a long position.
