At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
New York REIT Inc (NYSE:NYRT) has seen a decrease in hedge fund interest in recent months. There were 16 funds in our database with long NYRT positions at the end of September. At the end of this article we will also compare NYRT to other stocks including Shutterfly, Inc. (NASDAQ:SFLY), Rexford Industrial Realty Inc (NYSE:REXR), and LegacyTexas Financial Group Inc (NASDAQ:LTXB) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Now, we’re going to take a glance at the fresh action encompassing New York REIT Inc (NYSE:NYRT).
What have hedge funds been doing with New York REIT Inc (NYSE:NYRT)?
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, which represents a decline of four funds compared to the end of June. Below, you can check out the change in hedge fund sentiment towards NYRT over the last five quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Derek C. Schrier’s Indaba Capital Management has the number one position in New York REIT Inc (NYSE:NYRT), worth close to $28.7 million, accounting for 11.5% of its total 13F portfolio. On Indaba Capital Management’s heels is Phillip Goldstein, Andrew Dakos and Steven Samuels’ Bulldog Investors, with a $22.5 million position; the fund has 5.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Anand Parekh’s Alyeska Investment Group, J. Alan Reid, Jr.’s Forward Management and Steve Pei’s Gratia Capital. We should note that Forward Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually sold off their positions entirely. Interestingly, Jonathan Litt’s Land & Buildings Investment Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $9.6 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund sold off about $4.1 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as New York REIT Inc (NYSE:NYRT) but similarly valued. We will take a look at Shutterfly, Inc. (NASDAQ:SFLY), Rexford Industrial Realty Inc (NYSE:REXR), LegacyTexas Financial Group Inc (NASDAQ:LTXB), and Waddell & Reed Financial, Inc. (NYSE:WDR). This group of stocks’ market caps match NYRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SFLY | 23 | 460368 | 1 |
| REXR | 11 | 145721 | 0 |
| LTXB | 17 | 85442 | 4 |
| WDR | 15 | 118891 | 2 |
As you can see these stocks had an average of 17 funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $131 million in NYRT’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table, while Rexford Industrial Realty Inc (NYSE:REXR) is the least popular one with only 11 bullish hedge fund positions. New York REIT Inc (NYSE:NYRT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Shutterfly, Inc. (NASDAQ:SFLY) might be a better candidate to consider taking a long position in.
Disclosure: none
