Did Hedge Funds Drop The Ball On TIER REIT, Inc. (TIER) ?

We can judge whether TIER REIT, Inc. (NYSE:TIER) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

TIER REIT, Inc. (NYSE:TIER) investors should pay attention to a decrease in hedge fund sentiment lately. TIER was in 7 hedge funds’ portfolios at the end of December. There were 9 hedge funds in our database with TIER positions at the end of the previous quarter. Our calculations also showed that tier isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

We’re going to take a gander at the latest hedge fund action encompassing TIER REIT, Inc. (NYSE:TIER).

Hedge fund activity in TIER REIT, Inc. (NYSE:TIER)

At Q4’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in TIER a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).


Cliff Asness of AQR Capital Management

No of Hedge Funds with TIER Positions

Among these funds, Renaissance Technologies held the most valuable stake in TIER REIT, Inc. (NYSE:TIER), which was worth $31.2 million at the end of the fourth quarter. On the second spot was Land & Buildings Investment Management which amassed $23.4 million worth of shares. Moreover, GLG Partners, AWH Capital, and AQR Capital Management were also bullish on TIER REIT, Inc. (NYSE:TIER), allocating a large percentage of their portfolios to this stock.

Because TIER REIT, Inc. (NYSE:TIER) has witnessed a decline in interest from hedge fund managers, logic holds that there is a sect of fund managers that slashed their entire stakes in the third quarter. Interestingly, Israel Englander’s Millennium Management cut the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $12.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $8.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to TIER REIT, Inc. (NYSE:TIER). These stocks are Pitney Bowes Inc. (NYSE:PBI), National Research Corporation (NASDAQ:NRC), Pacific Biosciences of California, Inc. (NASDAQ:PACB), and MRC Global Inc (NYSE:MRC). All of these stocks’ market caps resemble TIER’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PBI 20 78677 -2
NRC 5 32066 -1
PACB 21 210649 5
MRC 15 112930 -2
Average 15.25 108581 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $71 million in TIER’s case. Pacific Biosciences of California, Inc. (NASDAQ:PACB) is the most popular stock in this table. On the other hand National Research Corporation (NASDAQ:NRC) is the least popular one with only 5 bullish hedge fund positions. TIER REIT, Inc. (NYSE:TIER) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on TIER as the stock returned 33.2% and outperformed the market by an even larger margin.

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