Did Hedge Funds Make The Right Call On Simon Property Group, Inc (SPG)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Simon Property Group, Inc (NYSE:SPG) and determine whether the smart money was really smart about this stock.

Simon Property Group, Inc (NYSE:SPG) has seen an increase in enthusiasm from smart money in recent months. SPG was in 29 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with SPG positions at the end of the previous quarter. Our calculations also showed that SPG 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.

In the 21st century investor’s toolkit there are a lot of gauges stock market investors use to value their stock investments. A couple of the most underrated gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a solid amount (see the details here).

Phill Gross of Adage Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the latest hedge fund action surrounding Simon Property Group, Inc (NYSE:SPG).

What have hedge funds been doing with Simon Property Group, Inc (NYSE:SPG)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SPG over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is SPG A Good Stock To Buy?

More specifically, Two Sigma Advisors was the largest shareholder of Simon Property Group, Inc (NYSE:SPG), with a stake worth $94.2 million reported as of the end of September. Trailing Two Sigma Advisors was Laurion Capital Management, which amassed a stake valued at $72.4 million. Arrowstreet Capital, Renaissance Technologies, and AQR Capital Management 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 Kamunting Street Capital allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 7.37% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, setting aside 0.91 percent of its 13F equity portfolio to SPG.

With a general bullishness amongst the heavyweights, key money managers have jumped into Simon Property Group, Inc (NYSE:SPG) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, assembled the largest position in Simon Property Group, Inc (NYSE:SPG). Laurion Capital Management had $72.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $56.4 million position during the quarter. The other funds with new positions in the stock are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Allan Teh’s Kamunting Street Capital, and Joel Greenblatt’s Gotham Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Simon Property Group, Inc (NYSE:SPG) but similarly valued. We will take a look at CMS Energy Corporation (NYSE:CMS), Parker-Hannifin Corporation (NYSE:PH), DocuSign, Inc. (NASDAQ:DOCU), and Mettler-Toledo International Inc. (NYSE:MTD). This group of stocks’ market valuations are similar to SPG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMS 28 421101 -2
PH 32 889095 -7
DOCU 47 1082768 14
MTD 31 616788 2
Average 34.5 752438 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $752 million. That figure was $419 million in SPG’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 28 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the least popular stock in this group but hedge fund interest is still below average. 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 but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on SPG, though not to the same extent, as the stock returned 24.6% during the second quarter and outperformed the market.

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