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Did Hedge Funds Make The Right Call On SL Green Realty Corp (SLG) ?

The latest 13F reporting period has come and gone, and 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. Now, 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 you are going to find out whether hedge funds thoughtSL Green Realty Corp (NYSE:SLG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

SL Green Realty Corp (NYSE:SLG) was in 23 hedge funds’ portfolios at the end of March. SLG has experienced a decrease in support from the world’s most elite money managers of late. There were 27 hedge funds in our database with SLG positions at the end of the previous quarter. Our calculations also showed that SLG 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.

At the moment there are dozens of metrics investors employ to size up their stock investments. A couple of the most useful metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outpace the broader indices by a superb margin (see the details here).

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. 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 if you have any good ideas send us an email. Now we’re going to take a peek at the key hedge fund action regarding SL Green Realty Corp (NYSE:SLG).

How have hedgies been trading SL Green Realty Corp (NYSE:SLG)?

Heading into the second quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in SLG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of SL Green Realty Corp (NYSE:SLG), with a stake worth $72 million reported as of the end of September. Trailing Renaissance Technologies was Levin Easterly Partners, which amassed a stake valued at $35.2 million. LDR Capital, 40 North Management, and Citadel Investment Group 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 LDR Capital allocated the biggest weight to SL Green Realty Corp (NYSE:SLG), around 36.18% of its 13F portfolio. Kamunting Street Capital is also relatively very bullish on the stock, earmarking 4.26 percent of its 13F equity portfolio to SLG.

Seeing as SL Green Realty Corp (NYSE:SLG) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their entire stakes heading into Q4. Interestingly, Ken Heebner’s Capital Growth Management sold off the largest investment of all the hedgies followed by Insider Monkey, valued at close to $26.2 million in stock. Daniel Johnson’s fund, Gillson Capital, also dropped its stock, about $9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to SL Green Realty Corp (NYSE:SLG). We will take a look at CAE, Inc. (NYSE:CAE), QTS Realty Trust Inc (NYSE:QTS), Stag Industrial Inc (NYSE:STAG), and Grupo Televisa SAB (NYSE:TV). This group of stocks’ market values are closest to SLG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAE 20 79383 10
QTS 21 365837 -2
STAG 15 79203 -3
TV 19 481852 0
Average 18.75 251569 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $192 million in SLG’s case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks SL Green Realty Corp (NYSE:SLG) is more popular among hedge funds. 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 still beat the market by 15.5 percentage points. Unfortunately SLG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SLG were disappointed as the stock returned 16.5% 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.