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Is Education Realty Trust, Inc. (EDR) A Good Stock to Buy?

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Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Education Realty Trust, Inc. (NYSE:EDR) was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. EDR investors should be aware of a decrease in hedge fund interest lately. There were 14 hedge funds in our database with EDR positions at the end of June. At the end of this article we will also compare EDR to other stocks including Blackbaud, Inc. (NASDAQ:BLKB), Proofpoint Inc (NASDAQ:PFPT), and BankUnited (NYSE:BKU) to get a better sense of its popularity.

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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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How are hedge funds trading Education Realty Trust, Inc. (NYSE:EDR)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 21% drop from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in EDR heading into this year, so hedge fund ownership of the stock is still up in 2016. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

EDR Chart

According to Insider Monkey’s hedge fund database, Millennium Management, one of the 10 largest hedge funds in the world, has the largest position in Education Realty Trust, Inc. (NYSE:EDR), worth close to $69.9 million. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, which holds a $35.9 million position. Remaining professional money managers with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Greg Poole’s Echo Street Capital Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

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