Equity Residential (NYSE:EQR) investors should be aware of an increase in hedge fund sentiment in recent months.
In the eyes of most shareholders, hedge funds are seen as slow, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at present, we at Insider Monkey hone in on the masters of this group, close to 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds' total capital, and by tracking their top equity investments, we have deciphered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Just as key, positive insider trading sentiment is a second way to break down the investments you're interested in. There are a variety of reasons for an executive to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).
With these "truths" under our belt, we're going to take a glance at the latest action regarding Equity Residential (NYSE:EQR).
Heading into 2013, a total of 21 of the hedge funds we track were bullish in this stock, a change of 5% from one quarter earlier. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably.
When looking at the hedgies we track, AEW Capital Management, managed by Jeffrey Furber, holds the most valuable position in Equity Residential (NYSE:EQR). AEW Capital Management has a $245 million position in the stock, comprising 6.5% of its 13F portfolio. On AEW Capital Management's heels is D. E. Shaw of D E Shaw, with a $155 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Ken Heebner's Capital Growth Management, Phill Gross and Robert Atchinson's Adage Capital Management and Cliff Asness's AQR Capital Management.
As aggregate interest increased, some big names were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most valuable position in Equity Residential (NYSE:EQR). Two Sigma Advisors had 6 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also initiated a $5 million position during the quarter. The only other fund with a new position in the stock is Richard Driehaus's Driehaus Capital.
Insider purchases made by high-level executives is at its handiest when the company in focus has seen transactions within the past 180 days. Over the latest half-year time frame, Equity Residential (NYSE:EQR) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
With the results shown by our research, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Equity Residential (NYSE:EQR) shareholders fit into this picture quite nicely.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.