Were Hedge Funds Right About Regency Centers Corp (REG)?

In this article you are going to find out whether hedge funds think Regency Centers Corp (NASDAQ:REG) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Regency Centers Corp (NASDAQ:REG) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. REG investors should pay attention to a decrease in hedge fund interest of late. There were 24 hedge funds in our database with REG positions at the end of the fourth quarter. Our calculations also showed that REG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Heebner of Capital Growth Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind let’s review the new hedge fund action regarding Regency Centers Corp (NASDAQ:REG).

Do Hedge Funds Think REG Is A Good Stock To Buy Now?

At first quarter’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REG over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Regency Centers Corp (NASDAQ:REG) was held by Waterfront Capital Partners, which reported holding $36 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $32.2 million position. Other investors bullish on the company included Capital Growth Management, D E Shaw, and Adage Capital Management. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Regency Centers Corp (NASDAQ:REG), around 3.26% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, designating 2.56 percent of its 13F equity portfolio to REG.

Seeing as Regency Centers Corp (NASDAQ:REG) has faced a decline in interest from hedge fund managers, it’s easy to see that there was a specific group of fund managers who were dropping their positions entirely heading into Q2. Intriguingly, Stuart J. Zimmer’s Zimmer Partners sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $92.3 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $12.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 7 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Regency Centers Corp (NASDAQ:REG) but similarly valued. We will take a look at Aramark (NYSE:ARMK), Inphi Corporation (NYSE:IPHI), Builders FirstSource, Inc. (NYSE:BLDR), Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR), Levi Strauss & Co. (NYSE:LEVI), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), and Upstart Holdings, Inc. (NASDAQ:UPST). This group of stocks’ market values resemble REG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $1076 million. That figure was $133 million in REG’s case. Builders FirstSource, Inc. (NYSE:BLDR) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. Regency Centers Corp (NASDAQ:REG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for REG is 33.2. 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 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on REG, though not to the same extent, as the stock returned 15.7% since the end of Q1 (through July 23rd) and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.