Is Spirit Realty Capital Inc (NYSE:SRC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Spirit Realty Capital Inc (NYSE:SRC) investors should be aware of an increase in hedge fund sentiment of late. Spirit Realty Capital Inc (NYSE:SRC) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. There were 17 hedge funds in our database with SRC positions at the end of the fourth quarter. Our calculations also showed that SRC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
John Overdeck of Two Sigma Advisors
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 take a peek at the latest hedge fund action surrounding Spirit Realty Capital Inc (NYSE:SRC).
Do Hedge Funds Think SRC Is A Good Stock To Buy Now?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the fourth quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in SRC a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Long Pond Capital held the most valuable stake in Spirit Realty Capital Inc (NYSE:SRC), which was worth $75.9 million at the end of the fourth quarter. On the second spot was Balyasny Asset Management which amassed $25.3 million worth of shares. Two Sigma Advisors, Millennium Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Long Pond Capital allocated the biggest weight to Spirit Realty Capital Inc (NYSE:SRC), around 2.59% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 0.64 percent of its 13F equity portfolio to SRC.
Consequently, key hedge funds have jumped into Spirit Realty Capital Inc (NYSE:SRC) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Spirit Realty Capital Inc (NYSE:SRC). Millennium Management had $16 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $3 million position during the quarter. The following funds were also among the new SRC investors: Michael Gelband’s ExodusPoint Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Andrew Weiss’s Weiss Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Spirit Realty Capital Inc (NYSE:SRC) but similarly valued. These stocks are American Eagle Outfitters Inc. (NYSE:AEO), AppFolio Inc (NASDAQ:APPF), Graphic Packaging Holding Company (NYSE:GPK), Hawaiian Electric Industries, Inc. (NYSE:HE), SL Green Realty Corp (NYSE:SLG), Science Applications International Corp (NYSE:SAIC), and Curtiss-Wright Corp. (NYSE:CW). This group of stocks’ market valuations are similar to SRC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEO | 43 | 948063 | 4 |
| APPF | 12 | 394366 | -7 |
| GPK | 21 | 476673 | -5 |
| HE | 12 | 196022 | -6 |
| SLG | 21 | 162062 | -1 |
| SAIC | 18 | 207548 | -10 |
| CW | 22 | 208527 | -1 |
| Average | 21.3 | 370466 | -3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $370 million. That figure was $167 million in SRC’s case. American Eagle Outfitters Inc. (NYSE:AEO) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 12 bullish hedge fund positions. Spirit Realty Capital Inc (NYSE:SRC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SRC is 30.3. 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 SRC, though not to the same extent, as the stock returned 19.2% since the end of Q1 (through July 23rd) and outperformed the market.
Follow Spirit Realty Capital Inc. (LON:SRC)
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Disclosure: None. This article was originally published at Insider Monkey.
