Hedge Funds Are Cashing Out Of Extra Space Storage, Inc. (EXR)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 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. In this article we look at what those investors think of Extra Space Storage, Inc. (NYSE:EXR).

Is Extra Space Storage, Inc. (NYSE:EXR) a bargain? Hedge funds were cutting their exposure. The number of bullish hedge fund positions retreated by 1 lately. Extra Space Storage, Inc. (NYSE:EXR) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. Our calculations also showed that EXR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 29 hedge funds in our database with EXR positions at the end of the fourth quarter.

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.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind we’re going to review the new hedge fund action regarding Extra Space Storage, Inc. (NYSE:EXR).

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

At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in EXR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Is EXR A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in Extra Space Storage, Inc. (NYSE:EXR), worth close to $36.9 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Zimmer Partners, led by Stuart J. Zimmer, holding a $29.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to Extra Space Storage, Inc. (NYSE:EXR), around 3.27% of its 13F portfolio. Brasada Capital Management is also relatively very bullish on the stock, earmarking 0.46 percent of its 13F equity portfolio to EXR.

Judging by the fact that Extra Space Storage, Inc. (NYSE:EXR) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that decided to sell off their entire stakes heading into Q2. Intriguingly, Ken Heebner’s Capital Growth Management cut the biggest investment of the 750 funds tracked by Insider Monkey, valued at about $9.8 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $7 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q2.

Let’s go over hedge fund activity in other stocks similar to Extra Space Storage, Inc. (NYSE:EXR). These stocks are CureVac N.V. (NASDAQ:CVAC), SK Telecom Co., Ltd. (NYSE:SKM), Ulta Beauty, Inc. (NASDAQ:ULTA), Shinhan Financial Group Co., Ltd. (NYSE:SHG), NVR, Inc. (NYSE:NVR), Citrix Systems, Inc. (NASDAQ:CTXS), and L Brands Inc (NYSE:LB). All of these stocks’ market caps match EXR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVAC 9 36312 0
SKM 8 113876 4
ULTA 46 1438287 3
SHG 6 29688 -1
NVR 39 1261359 -7
CTXS 20 627946 -9
LB 59 5930346 7
Average 26.7 1348259 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $1348 million. That figure was $185 million in EXR’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 6 bullish hedge fund positions. Extra Space Storage, Inc. (NYSE:EXR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXR is 52.8. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on EXR as the stock returned 31.5% since the end of Q1 (through 7/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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