Is Northstar Realty Finance Corp. (NYSE:NRF) a healthy stock for your portfolio? Prominent investors are becoming more confident. The number of long hedge fund bets advanced by 4 lately.
If you'd ask most stock holders, hedge funds are viewed as unimportant, old investment vehicles of the past. While there are over 8000 funds trading today, we choose to focus on the elite of this club, about 450 funds. It is estimated that this group oversees the majority of the hedge fund industry's total asset base, and by watching their highest performing picks, we have brought to light a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as important, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you'd expect, there are plenty of motivations for an executive to drop shares of his or her company, but just one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).
Now, it's important to take a peek at the recent action surrounding Northstar Realty Finance Corp. (NYSE:NRF).
In preparation for this quarter, a total of 25 of the hedge funds we track were long in this stock, a change of 19% from the first quarter. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes considerably.
When looking at the hedgies we track, SAC Capital Advisors, managed by Steven Cohen, holds the most valuable position in Northstar Realty Finance Corp. (NYSE:NRF). SAC Capital Advisors has a $82.7 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Bain Capital of Brookside Capital, with a $81.8 million position; 1.8% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include James Dinan's York Capital Management, Anand Parekh's Alyeska Investment Group and Jim Simons's Renaissance Technologies.
Now, key hedge funds have jumped into Northstar Realty Finance Corp. (NYSE:NRF) headfirst. York Capital Management, managed by James Dinan, assembled the most valuable position in Northstar Realty Finance Corp. (NYSE:NRF). York Capital Management had 49.7 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $22.7 million position during the quarter. The other funds with brand new NRF positions are Louis Bacon's Moore Global Investments, Robert B. Gillam's McKinley Capital Management, and David Costen Haley's HBK Investments.
Insider purchases made by high-level executives is most useful when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time period, Northstar Realty Finance Corp. (NYSE:NRF) has seen 1 unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let's also review hedge fund and insider activity in other stocks similar to Northstar Realty Finance Corp. (NYSE:NRF). These stocks are Equity One, Inc. (NYSE:EQY), EPR Properties (NYSE:EPR), Glimcher Realty Trust (NYSE:GRT), and Washington Real Estate Investment Trust (NYSE:WRE). This group of stocks belong to the reit - retail industry and their market caps resemble NRF's market cap.