Where Do Hedge Funds Stand On NetSTREIT Corp. (NTST)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards NetSTREIT Corp. (NYSE:NTST).

Hedge fund interest in NetSTREIT Corp. (NYSE:NTST) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NTST isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Rafael Holdings, Inc. (NYSE:RFL), Interface, Inc. (NASDAQ:TILE), and iTeos Therapeutics, Inc. (NASDAQ:ITOS) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 we’re going to review the latest hedge fund action encompassing NetSTREIT Corp. (NYSE:NTST).

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

At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in NTST a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Long Pond Capital was the largest shareholder of NetSTREIT Corp. (NYSE:NTST), with a stake worth $83.2 million reported as of the end of June. Trailing Long Pond Capital was Gillson Capital, which amassed a stake valued at $6.6 million. Schonfeld Strategic Advisors, Millennium Management, and Two Sigma Advisors 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 NetSTREIT Corp. (NYSE:NTST), around 2.89% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 0.62 percent of its 13F equity portfolio to NTST.

Since NetSTREIT Corp. (NYSE:NTST) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds that slashed their entire stakes heading into Q3. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the largest investment of the 750 funds watched by Insider Monkey, valued at close to $1.6 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $0.5 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to NetSTREIT Corp. (NYSE:NTST). These stocks are Rafael Holdings, Inc. (NYSE:RFL), Interface, Inc. (NASDAQ:TILE), iTeos Therapeutics, Inc. (NASDAQ:ITOS), Heritage Financial Corporation (NASDAQ:HFWA), WisdomTree Investments, Inc. (NASDAQ:WETF), The Gorman-Rupp Company (NYSE:GRC), and Rite Aid Corporation (NYSE:RAD). This group of stocks’ market values are closest to NTST’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $106 million in NTST’s case. WisdomTree Investments, Inc. (NASDAQ:WETF) is the most popular stock in this table. On the other hand Rafael Holdings, Inc. (NYSE:RFL) is the least popular one with only 8 bullish hedge fund positions. NetSTREIT Corp. (NYSE:NTST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTST is 40.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately NTST wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NTST investors were disappointed as the stock returned 3.3% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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