Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Spirit Realty Capital Inc (NYSE:SRC) going to take off soon? The smart money is becoming hopeful. The number of long hedge fund positions advanced by 5 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 Phillips 66 Partners LP (NYSE:PSXP), Endurance Specialty Holdings Ltd. (NYSE:ENH), and Cullen/Frost Bankers, Inc. (NYSE:CFR) to gather more data points.
Follow Spirit Realty Capital Inc. (LON:SRC)
Follow Spirit Realty Capital Inc. (LON:SRC)
In the financial world, there are many tools shareholders have at their disposal to value their holdings. A pair of the best tools is composed of hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best investment managers can beat the market by a healthy margin (see the details here).
Keeping this in mind, let’s take a look at the new action encompassing Spirit Realty Capital Inc (NYSE:SRC).
What have hedge funds been doing with Spirit Realty Capital Inc (NYSE:SRC)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. With the smart money’s sentiment swirling, there exist a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in Spirit Realty Capital Inc (NYSE:SRC). Millennium Management has an $91.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Echo Street Capital Management, managed by Greg Poole, which holds an $68.4 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise James Dondero’s Highland Capital Management, Ken Griffin’s Citadel Investment Group and Dmitry Balyasny’s Balyasny Asset Management.
As one would reasonably expect, key money managers have been driving this bullishness. Ascend Capital, managed by Malcolm Fairbairn, created the biggest position in Spirit Realty Capital Inc (NYSE:SRC). Ascend Capital had $10.7 million invested in the company at the end of the quarter. Curtis Schenker and Craig Effron’s Scoggin also made an $8.9 million investment in the stock during the quarter. The following funds were also among the new SRC investors: Richard Driehaus’s Driehaus Capital, David Costen Haley’s HBK Investments, and J. Alan Reid, Jr.’s Forward 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 Phillips 66 Partners LP (NYSE:PSXP), Endurance Specialty Holdings Ltd. (NYSE:ENH), Cullen/Frost Bankers, Inc. (NYSE:CFR), and Mercadolibre Inc (NASDAQ:MELI). This group of stocks’ market values resemble SRC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSXP | 7 | 25554 | 1 |
| ENH | 22 | 227523 | 7 |
| CFR | 15 | 51427 | 4 |
| MELI | 14 | 286423 | 0 |
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 $148 million. That figure was $337 million in SRC’s case. Endurance Specialty Holdings Ltd. (NYSE:ENH) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Spirit Realty Capital Inc (NYSE:SRC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
