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Did Hedge Funds Make The Right Call On Healthpeak Properties, Inc. (PEAK) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Healthpeak Properties, Inc. (NYSE:PEAK) based on that data and determine whether they were really smart about the stock.

Hedge fund interest in Healthpeak Properties, Inc. (NYSE:PEAK) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Restaurant Brands International Inc (NYSE:QSR), Lennar Corporation (NYSE:LEN), and Duke Realty Corporation (NYSE:DRE) to gather more data points. Our calculations also showed that PEAK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. With all of this in mind we’re going to take a gander at the key hedge fund action regarding Healthpeak Properties, Inc. (NYSE:PEAK).

How are hedge funds trading Healthpeak Properties, Inc. (NYSE:PEAK)?

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PEAK over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of Healthpeak Properties, Inc. (NYSE:PEAK), with a stake worth $96.5 million reported as of the end of September. Trailing Citadel Investment Group was Zimmer Partners, which amassed a stake valued at $93 million. D E Shaw, Echo Street Capital Management, and Waterfront Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Healthpeak Properties, Inc. (NYSE:PEAK), around 2.06% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, earmarking 1.67 percent of its 13F equity portfolio to PEAK.

Seeing as Healthpeak Properties, Inc. (NYSE:PEAK) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies that decided to sell off their positions entirely in the first quarter. Intriguingly, John Khoury’s Long Pond Capital sold off the biggest investment of the 750 funds tracked by Insider Monkey, worth about $57.6 million in stock, and Jonathan Litt’s Land & Buildings Investment Management was right behind this move, as the fund dropped about $27.8 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Healthpeak Properties, Inc. (NYSE:PEAK) but similarly valued. We will take a look at Restaurant Brands International Inc (NYSE:QSR), Lennar Corporation (NYSE:LEN), Duke Realty Corporation (NYSE:DRE), and Jack Henry & Associates, Inc. (NASDAQ:JKHY). This group of stocks’ market caps are closest to PEAK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QSR 41 2250209 -11
LEN 57 1121019 -6
DRE 16 64897 -8
JKHY 27 277076 -2
Average 35.25 928300 -6.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $928 million. That figure was $292 million in PEAK’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 16 bullish hedge fund positions. Healthpeak Properties, Inc. (NYSE:PEAK) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately PEAK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PEAK investors were disappointed as the stock returned 17.4% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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