Hedge Fund Sentiment Is Stagnant On Mack Cali Realty Corp (CLI)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Mack Cali Realty Corp (NYSE:CLI) based on those filings.

Mack Cali Realty Corp (NYSE:CLI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. 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 International Speedway Corporation (NASDAQ:ISCA), iRhythm Technologies, Inc. (NASDAQ:IRTC), and Sunrun Inc (NASDAQ:RUN) to gather more data points. Our calculations also showed that CLI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Managemnet

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the key hedge fund action surrounding Mack Cali Realty Corp (NYSE:CLI).

How have hedgies been trading Mack Cali Realty Corp (NYSE:CLI)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CLI over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Hedge Fund Sentiment Is Stagnant On Mack Cali Realty Corp (NYSE:CLI)

The largest stake in Mack Cali Realty Corp (NYSE:CLI) was held by Renaissance Technologies, which reported holding $107.1 million worth of stock at the end of September. It was followed by Land & Buildings Investment Management with a $10.8 million position. Other investors bullish on the company included Balyasny Asset Management, Fisher Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position, Land & Buildings Investment Management allocated the biggest weight to Mack Cali Realty Corp (NYSE:CLI), around 2.38% of its 13F portfolio. Barington Capital Group is also relatively very bullish on the stock, setting aside 1.86 percent of its 13F equity portfolio to CLI.

Because Mack Cali Realty Corp (NYSE:CLI) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $2.7 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund dropped about $1.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Mack Cali Realty Corp (NYSE:CLI). We will take a look at International Speedway Corporation (NASDAQ:ISCA), iRhythm Technologies, Inc. (NASDAQ:IRTC), Sunrun Inc (NASDAQ:RUN), and Lions Gate Entertainment Corporation (NYSE:LGF-A). This group of stocks’ market caps match CLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISCA 15 217768 1
IRTC 17 195889 1
RUN 18 582758 1
LGF-A 16 179155 -5
Average 16.5 293893 -0.5

View the 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 $294 million. That figure was $140 million in CLI’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand, International Speedway Corporation (NASDAQ:ISCA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Mack Cali Realty Corp (NYSE:CLI) is even less popular than ISCA. Hedge funds dodged a bullet by taking a bearish stance towards CLI. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, CLI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CLI investors were disappointed as the stock returned -0.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large-cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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