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First Industrial Realty Trust, Inc. (FR): Are Hedge Funds Right About This Stock?

Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2014) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like First Industrial Realty Trust, Inc. (NYSE:FR).

First Industrial Realty Trust, Inc. (NYSE:FR) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that FR isn’t among the 30 most popular stocks among hedge funds.

According to most shareholders, hedge funds are seen as unimportant, old financial tools of years past. While there are over 8,000 funds with their doors open today, We choose to focus on the aristocrats of this club, about 700 funds. These hedge fund managers control the majority of the smart money’s total asset base, and by monitoring their top picks, Insider Monkey has come up with various investment strategies that have historically defeated the market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

Clint Carlson, Carlson Capital

Let’s take a look at the new hedge fund action regarding First Industrial Realty Trust, Inc. (NYSE:FR).

Hedge fund activity in First Industrial Realty Trust, Inc. (NYSE:FR)

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in FR over the last 13 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

FR_dec2018

More specifically, Renaissance Technologies was the largest shareholder of First Industrial Realty Trust, Inc. (NYSE:FR), with a stake worth $106.3 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $50.2 million. Third Avenue Management, Waterfront Capital Partners, and Carlson Capital were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the most valuable position in First Industrial Realty Trust, Inc. (NYSE:FR). Millennium Management had $6.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.9 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s go over hedge fund activity in other stocks similar to First Industrial Realty Trust, Inc. (NYSE:FR). We will take a look at Aaron’s, Inc. (NYSE:AAN), Ardagh Group S.A. (NYSE:ARD), Flowers Foods, Inc. (NYSE:FLO), and Macquarie Infrastructure Corporation (NYSE:MIC). This group of stocks’ market caps are closest to FR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AAN 18 242399 -3
ARD 8 80579 0
FLO 20 183753 3
MIC 25 318358 -4
Average 17.75 206272 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $301 million in FR’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 8 bullish hedge fund positions. First Industrial Realty Trust, Inc. (NYSE:FR) 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. In this regard MIC might be a better candidate to consider a long position.

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

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