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What Hedge Funds Think Of These Two Stocks On A Roll Today

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News of Biomed Realty Trust Inc (NYSE:BMR) looking to sell itself has been warmly received by Wall Street, with the stock opening over 10% higher today and currently trading up by more than 13%. According to Bloomberg, the company has attracted the attention of several firms, including Blackstone Group LP (NYSE:BX), with Morgan Stanley set to broker a deal. Representatives of all three firms have declined to comment. In other news, the United States’ largest life insurer, Metlife Inc (NYSE:MET), has increased its share buyback program from $261 million to $1 billion. The market reacted positively to the news, with the stock opening 0.69% higher today. After surging even higher, it has since fallen back close to where it’s opening, trading up by 0.56% on the day. While the news on the companies may be positive, hedge funds’ sentiment towards them is mixed.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 57.6 percentage points (118% return vs. the S&P 500’s 60.4% gain) over the last 36 months (see the details here).

A real estate investment trust, Biomed Realty Trust Inc (NYSE:BMR) manages high-tech laboratory properties collectively valued at more than $8 billion. On September 15, the company announced a 2015 third quarter dividend of $0.26 per share, providing a healthy yield of 5.29%. The stock’s trailing Price to Earnings (P/E) ratio of 21.xx is just less than half the industry average of 51.10, while the forward P/E ratio of 12.79 hints at some untapped financial potential.

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Hedge fund sentiment towards Biomed Realty Trust Inc (NYSE:BMR) slightly deteriorated during the second quarter of 2015, as the stock was slowly but steadily losing value. The number of funds holding the stock decreased to 11 from 12, with the cumulative value of their holdings falling by 19.5% to $128 million. Billionaire Ken Griffin dumped 88% of his stake in the company, leaving his fund, Citadel Investment Group, with just 43,708 shares. Ken Fisher and Jim Simons have not shared Griffin’s pessimism about the stock, having increased their holdings during the quarter. Fisher’s Fisher Asset Management reported a 2% increase in its stake to 2.02 million shares, while Simons’ Renaissance Technologies held 549,400 shares, up by 43% during the quarter.

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