Should You Avoid W.P. Carey Inc. REIT (WPC)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on W.P. Carey Inc. REIT (NYSE:WPC).

Is W.P. Carey Inc. REIT (NYSE:WPC) a buy, sell, or hold? The best stock pickers are taking a bearish view. The number of bullish hedge fund positions shrunk by 1 lately. WPC was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 12 hedge funds in our database with WPC holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Toll Brothers Inc (NYSE:TOL), Cadence Design Systems Inc (NASDAQ:CDNS), and The Middleby Corporation (NASDAQ:MIDD) to gather more data points.

According to most market participants, hedge funds are seen as worthless, old financial tools of yesteryear. While there are more than an 8000 funds with their doors open today, Our researchers hone in on the masters of this club, around 700 funds. These hedge fund managers command the lion’s share of all hedge funds’ total capital, and by keeping track of their finest picks, Insider Monkey has discovered numerous investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, we’re going to take a look at the recent action surrounding W.P. Carey Inc. REIT (NYSE:WPC).

What does the smart money think about W.P. Carey Inc. REIT (NYSE:WPC)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Markel Gayner Asset Management, managed by Tom Gayner, holds the largest position in W.P. Carey Inc. REIT (NYSE:WPC). Markel Gayner Asset Management has a $54.9 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Forward Management, led by J. Alan Reid, Jr., holding a $19.4 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass Leighton Welch’s Welch Capital Partners, D. E. Shaw’s D E Shaw and Matthew Hulsizer’s PEAK6 Capital Management.

Judging by the fact that W.P. Carey Inc. REIT (NYSE:WPC) has experienced a declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that elected to cut their full holdings in the third quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors cut the biggest investment of the 700 funds followed by Insider Monkey, comprising close to $6.9 million in stock, and Jim Simons’ Renaissance Technologies was right behind this move, as the fund cut about $5 million worth of shares.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as W.P. Carey Inc. REIT (NYSE:WPC) but similarly valued. We will take a look at Toll Brothers Inc (NYSE:TOL), Cadence Design Systems Inc (NASDAQ:CDNS), The Middleby Corporation (NASDAQ:MIDD), and UGI Corp (NYSE:UGI). This group of stocks’ market caps are similar to WPC’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $761 million, higher than the $109 million in WPC’s case. Toll Brothers Inc (NYSE:TOL) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks W.P. Carey Inc. REIT (NYSE:WPC) is even less popular than UGI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.