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Bluerock Residential Growth REIT Inc (BRG): Hedge Funds Are Snapping Up

We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) based on that data.

Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that BRG isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

James Dondero Highland Capital Management

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we’re going to analyze the new hedge fund action regarding Bluerock Residential Growth REIT Inc (NYSEMKT:BRG).

How are hedge funds trading Bluerock Residential Growth REIT Inc (NYSEMKT:BRG)?

At Q2’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BRG over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

BRG_nov2019

Among these funds, Renaissance Technologies held the most valuable stake in Bluerock Residential Growth REIT Inc (NYSEMKT:BRG), which was worth $10.7 million at the end of the second quarter. On the second spot was Highland Capital Management which amassed $2.7 million worth of shares. Moreover, Arrowstreet Capital, Springbok Capital, and Citadel Investment Group were also bullish on Bluerock Residential Growth REIT Inc (NYSEMKT:BRG), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in Bluerock Residential Growth REIT Inc (NYSEMKT:BRG). Two Sigma Advisors had $0.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.1 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) but similarly valued. These stocks are Tailored Brands, Inc. (NYSE:TLRD), ACNB Corporation (NASDAQ:ACNB), Sutro Biopharma, Inc. (NASDAQ:STRO), and Kadmon Holdings, Inc. (NYSE:KDMN). All of these stocks’ market caps are closest to BRG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TLRD 18 42294 0
ACNB 1 3324 0
STRO 10 51668 1
KDMN 15 116709 0
Average 11 53499 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $20 million in BRG’s case. Tailored Brands, Inc. (NYSE:TLRD) is the most popular stock in this table. On the other hand ACNB Corporation (NASDAQ:ACNB) is the least popular one with only 1 bullish hedge fund positions. Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BRG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BRG investors were disappointed as the stock returned 1.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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