We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Brookfield Property REIT Inc. (NASDAQ:BPYU) and determine whether hedge funds skillfully traded this stock.
Brookfield Property REIT Inc. (NASDAQ:BPYU) has experienced a decrease in hedge fund sentiment of late. Our calculations also showed that BPYU isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are a large number of signals market participants employ to size up stocks. A couple of the most underrated signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the broader indices by a solid amount (see the details here).
[caption id="attachment_341290" align="aligncenter" width="394"] Phillip Goldstein of Bulldog Investors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a glance at the fresh hedge fund action encompassing Brookfield Property REIT Inc. (NASDAQ:BPYU).
How are hedge funds trading Brookfield Property REIT Inc. (NASDAQ:BPYU)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in BPYU a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Brookfield Property REIT Inc. (NASDAQ:BPYU) was held by Arrowstreet Capital, which reported holding $4.3 million worth of stock at the end of September. It was followed by Millennium Management with a $1.5 million position. Other investors bullish on the company included Renaissance Technologies, Bulldog Investors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Bulldog Investors allocated the biggest weight to Brookfield Property REIT Inc. (NASDAQ:BPYU), around 0.32% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to BPYU.
Seeing as Brookfield Property REIT Inc. (NASDAQ:BPYU) has experienced declining sentiment from the smart money, it's easy to see that there lies a certain "tier" of funds that decided to sell off their positions entirely by the end of the first quarter. Intriguingly, D. E. Shaw's D E Shaw sold off the biggest position of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $9.8 million in stock, and Sander Gerber's Hudson Bay Capital Management was right behind this move, as the fund dropped about $3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Brookfield Property REIT Inc. (NASDAQ:BPYU). These stocks are Cass Information Systems, Inc. (NASDAQ:CASS), Vista Outdoor Inc (NYSE:VSTO), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), and Seritage Growth Properties (NYSE:SRG). This group of stocks' market valuations are closest to BPYU's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CASS,9,11969,-2 VSTO,19,121745,0 MCRI,15,75297,3 SRG,17,85126,2 Average,15,73534,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $9 million in BPYU's case. Vista Outdoor Inc (NYSE:VSTO) is the most popular stock in this table. On the other hand Cass Information Systems, Inc. (NASDAQ:CASS) is the least popular one with only 9 bullish hedge fund positions. Brookfield Property REIT Inc. (NASDAQ:BPYU) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on BPYU, though not to the same extent, as the stock returned 20.8% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.