Duke Realty Corporation (DRE): Are Hedge Funds Right About This Stock?

In this article you are going to find out whether hedge funds think Duke Realty Corporation (NYSE:DRE) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Duke Realty Corporation (NYSE:DRE) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Duke Realty Corporation (NYSE:DRE) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. There were 17 hedge funds in our database with DRE positions at the end of the fourth quarter. Our calculations also showed that DRE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. You can subscribe to our free daily newsletter on our homepage. Now let’s analyze the recent hedge fund action encompassing Duke Realty Corporation (NYSE:DRE).

Do Hedge Funds Think DRE Is A Good Stock To Buy Now?

At first quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in DRE a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

More specifically, Zimmer Partners was the largest shareholder of Duke Realty Corporation (NYSE:DRE), with a stake worth $165.6 million reported as of the end of March. Trailing Zimmer Partners was D E Shaw, which amassed a stake valued at $37.5 million. Millennium Management, Citadel Investment Group, and MD Sass 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 Duke Realty Corporation (NYSE:DRE), around 2.25% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, designating 2.21 percent of its 13F equity portfolio to DRE.

As aggregate interest increased, some big names have been driving this bullishness. Weiss Asset Management, managed by Andrew Weiss, established the largest position in Duke Realty Corporation (NYSE:DRE). Weiss Asset Management had $1.7 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new DRE positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Benjamin A. Smith’s Laurion Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Duke Realty Corporation (NYSE:DRE) but similarly valued. These stocks are Zendesk Inc (NYSE:ZEN), WPP Plc (NASDAQ:WPP), Grifols SA (NASDAQ:GRFS), Arch Capital Group Ltd. (NASDAQ:ACGL), Avangrid, Inc. (NYSE:AGR), Masco Corporation (NYSE:MAS), and Altice USA, Inc. (NYSE:ATUS). All of these stocks’ market caps resemble DRE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZEN 45 1483992 -13
WPP 5 34389 -1
GRFS 12 321129 -5
ACGL 34 1671185 0
AGR 15 58976 5
MAS 33 686447 -7
ATUS 48 3599095 -8
Average 27.4 1122173 -4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $1122 million. That figure was $280 million in DRE’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 5 bullish hedge fund positions. Duke Realty Corporation (NYSE:DRE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DRE is 50.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on DRE as the stock returned 20.9% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.

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