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

Page 1 of 2

Should BRE Properties Inc (NYSE:BRE) investors track the following data?

If you were to ask many investors, hedge funds are assumed to be useless, outdated investment tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey looks at the bigwigs of this group, around 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry’s total capital, and by tracking their best stock picks, we’ve brought to light a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat 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 outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as key, positive insider trading sentiment is another way to look at the world of equities. As the old adage goes: there are a variety of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this strategy if piggybackers know what to do (learn more here).

BRE Properties Inc (NYSE:BRE)

What’s more, we’re going to examine the recent info about BRE Properties Inc (NYSE:BRE).

What does the smart money think about BRE Properties Inc (NYSE:BRE)?

Heading into Q3, a total of 14 of the hedge funds we track were bullish in this stock, a change of -22% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly.

Out of the firms we follow, AEW Capital Management had the biggest position in BRE Properties Inc (NYSE:BRE), worth close to $67 million, accounting for 1.7% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $45.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Eric Mindich’s Eton Park Capital, John Khoury’s Long Pond Capital and Louis Bacon’s Moore Global Investments.

Since BRE Properties Inc (NYSE:BRE) has faced dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there was a specific group of hedge funds that decided to sell off their entire stakes in Q1. At the top of the heap, Nick Niell’s Arrowgrass Capital Partners dropped the biggest stake of all the hedgies we monitor, worth an estimated $32.8 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $9.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds in Q1.

Insider trading activity in BRE Properties Inc (NYSE:BRE)

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time period, BRE Properties Inc (NYSE:BRE) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to BRE Properties Inc (NYSE:BRE). These stocks are American Campus Communities, Inc. (NYSE:ACC), Two Harbors Investment Corp (NYSE:TWO), Apartment Investment and Management Co. (NYSE:AIV), Equity Lifestyle Properties, Inc. (NYSE:ELS), and Home Properties, Inc. (NYSE:HME). This group of stocks are in the reit – residential industry and their market caps resemble BRE’s market cap.

Page 1 of 2