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Hedge Funds Are Dumping Lexington Realty Trust (LXP)

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Should Lexington Realty Trust (NYSE:LXP) investors track the following data?

In the eyes of many market players, hedge funds are seen as bloated, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open currently, this site aim at the moguls of this group, around 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total capital, and by keeping an eye on their highest performing investments, we’ve unsheathed a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as necessary, positive insider trading activity is another way to analyze the investments you’re interested in. As the old adage goes: there are lots of motivations for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this tactic if you understand where to look (learn more here).

Furthermore, let’s examine the newest info about Lexington Realty Trust (NYSE:LXP).

How are hedge funds trading Lexington Realty Trust (NYSE:LXP)?

In preparation for the third quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -47% from the first quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially.

Lexington Realty Trust (NYSE:LXP)When using filings from the hedgies we track, Forward Management, managed by J. Alan Reid, Jr., holds the most valuable position in Lexington Realty Trust (NYSE:LXP). Forward Management has a $33.4 million position in the stock, comprising 2.8% of its 13F portfolio. Coming in second is J. Alan Reid, Jr. of Forward Management, with a $14.7 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Chuck Royce’s Royce & Associates, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.

Because Lexington Realty Trust (NYSE:LXP) has witnessed a fall in interest from the smart money’s best and brightest, logic holds that there were a few fund managers that decided to sell off their entire stakes heading into Q2. At the top of the heap, Richard Driehaus’s Driehaus Capital cut the biggest stake of the “upper crust” of funds we track, totaling an estimated $5.7 million in stock, and Ken Griffin of Citadel Investment Group was right behind this move, as the fund sold off about $4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 7 funds heading into Q2.

What have insiders been doing with Lexington Realty Trust (NYSE:LXP)?

Insider buying made by high-level executives is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time frame, Lexington Realty Trust (NYSE:LXP) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Lexington Realty Trust (NYSE:LXP). These stocks are Redwood Trust, Inc. (NYSE:RWT), Chimera Investment Corporation (NYSE:CIM), PS Business Parks Inc (NYSE:PSB), Brandywine Realty Trust (NYSE:BDN), and Newcastle Investment Corp. (NYSE:NCT). This group of stocks are in the reit – diversified industry and their market caps match LXP’s market cap.

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