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Rouse Properties Inc (RSE): Are Hedge Funds Right About This Stock?

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Is Rouse Properties Inc (NYSE:RSE) a healthy stock for your portfolio? The smart money is getting less optimistic. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience

If you’d ask most market participants, hedge funds are assumed to be worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the crème de la crème of this group, around 450 funds. It is estimated that this group oversees the majority of the smart money’s total asset base, and by tracking their highest performing stock picks, we have found a few investment strategies that have historically outpaced 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as key, optimistic insider trading sentiment is a second way to parse down the stock market universe. There are a number of stimuli for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).

With all of this in mind, we’re going to take a look at the key action encompassing Rouse Properties Inc (NYSE:RSE).

Hedge fund activity in Rouse Properties Inc (NYSE:RSE)

In preparation for this quarter, a total of 7 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully.

Rouse Properties Inc (NYSE:RSE)According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Rouse Properties Inc (NYSE:RSE). Royce & Associates has a $11.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is Louis Bacon of Moore Global Investments, with a $9.5 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Cliff Asness’s AQR Capital Management and David Costen Haley’s HBK Investments.

Due to the fact that Rouse Properties Inc (NYSE:RSE) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds that elected to cut their positions entirely in Q1. Intriguingly, Murray Stahl’s Horizon Asset Management sold off the largest stake of all the hedgies we monitor, worth close to $79.5 million in stock. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading Rouse Properties Inc (NYSE:RSE)?

Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, Rouse Properties Inc (NYSE:RSE) has experienced 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Rouse Properties Inc (NYSE:RSE). These stocks are Acadia Realty Trust (NYSE:AKR), E-House (China) Holdings Limited (ADR) (NYSE:EJ), Tejon Ranch Company (NYSE:TRC), Kennedy-Wilson Holdings Inc (NYSE:KW), and FirstService Corporation (USA) (NASDAQ:FSRV). All of these stocks are in the property management industry and their market caps resemble RSE’s market cap.

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