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Did Hedge Funds Make The Right Call On Weingarten Realty Investors (WRI) ?

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 thoughtWeingarten Realty Investors (NYSE:WRI) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Weingarten Realty Investors (NYSE:WRI) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. 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 Liberty Latin America Ltd. (NASDAQ:LILAK), Brandywine Realty Trust (NYSE:BDN), and Advanced Energy Industries, Inc. (NASDAQ:AEIS) to gather more data points. Our calculations also showed that WRI 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to go over the key hedge fund action regarding Weingarten Realty Investors (NYSE:WRI).

What does smart money think about Weingarten Realty Investors (NYSE:WRI)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WRI over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Echo Street Capital Management was the largest shareholder of Weingarten Realty Investors (NYSE:WRI), with a stake worth $17 million reported as of the end of September. Trailing Echo Street Capital Management was Renaissance Technologies, which amassed a stake valued at $14.4 million. Waterfront Capital Partners, Winton Capital Management, and Millennium 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 Waterfront Capital Partners allocated the biggest weight to Weingarten Realty Investors (NYSE:WRI), around 1.22% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 0.6 percent of its 13F equity portfolio to WRI.

Because Weingarten Realty Investors (NYSE:WRI) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely last quarter. It’s worth mentioning that Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors cut the biggest stake of the 750 funds monitored by Insider Monkey, totaling close to $0.8 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dumped about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Weingarten Realty Investors (NYSE:WRI) but similarly valued. We will take a look at Liberty Latin America Ltd. (NASDAQ:LILAK), Brandywine Realty Trust (NYSE:BDN), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and Casella Waste Systems Inc. (NASDAQ:CWST). This group of stocks’ market values match WRI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LILAK 25 257107 4
BDN 11 24156 -7
AEIS 14 58741 -6
CWST 16 147998 6
Average 16.5 122001 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $72 million in WRI’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Brandywine Realty Trust (NYSE:BDN) is the least popular one with only 11 bullish hedge fund positions. Weingarten Realty Investors (NYSE:WRI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 18.6% in 2020 through July 27th but beat the market by 17.1 percentage points. Unfortunately WRI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on WRI were disappointed as the stock returned 16.8% during the same time period 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 many of these stocks already outperformed the market so far this year.

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