Brookfield Office Properties Inc (USA) (NYSE:BPO) investors should be aware of a decrease in hedge fund sentiment in recent months.
If you'd ask most stock holders, hedge funds are viewed as underperforming, old financial tools of years past. While there are more than 8000 funds with their doors open at the moment, we hone in on the leaders of this group, around 450 funds. It is estimated that this group controls most of all hedge funds' total asset base, and by monitoring their best investments, we have come up with a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, optimistic insider trading activity is another way to break down the financial markets. As the old adage goes: there are a variety of reasons for an insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).
Consequently, let's take a gander at the recent action regarding Brookfield Office Properties Inc (USA) (NYSE:BPO).
At Q1's end, a total of 7 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Jim Simons's Renaissance Technologies had the largest position in Brookfield Office Properties Inc (USA) (NYSE:BPO), worth close to $32 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is AEW Capital Management, managed by Jeffrey Furber, which held a $17.2 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other peers that hold long positions include Ken Gray and Steve Walsh's Bryn Mawr Capital, Ken Griffin's Citadel Investment Group and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Judging by the fact that Brookfield Office Properties Inc (USA) (NYSE:BPO) has witnessed a declination in interest from the aggregate hedge fund industry, it's easy to see that there was a specific group of money managers who sold off their entire stakes in Q1. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest position of all the hedgies we watch, comprising an estimated $6.1 million in stock.. Martin Whitman's fund, Third Avenue Management, also cut its stock, about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider purchases made by high-level executives is most useful when the company we're looking at has experienced transactions within the past six months. Over the last half-year time frame, Brookfield Office Properties Inc (USA) (NYSE:BPO) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to Brookfield Office Properties Inc (USA) (NYSE:BPO). These stocks are Forest City Enterprises, Inc. (NYSE:FCE-A), Jones Lang LaSalle Inc (NYSE:JLL), Icahn Enterprises LP (NASDAQ:IEP), Realogy Holdings Corp (NYSE:RLGY), and CBRE Group Inc (NYSE:CBG). This group of stocks belong to the property management industry and their market caps are closest to BPO's market cap.