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Hedge Funds Are Dumping Empire State Realty Trust Inc (ESRT)

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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Empire State Realty Trust Inc (NYSE:ESRT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Empire State Realty Trust Inc (NYSE:ESRT) was in 12 hedge funds’ portfolios at the end of June. ESRT shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 14 hedge funds in our database with ESRT positions at the end of the previous quarter. Our calculations also showed that ESRT isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

ESRT_oct2019

Let’s view the fresh hedge fund action surrounding Empire State Realty Trust Inc (NYSE:ESRT).

How have hedgies been trading Empire State Realty Trust Inc (NYSE:ESRT)?

At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ESRT over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Dmitry Balyasny

More specifically, Renaissance Technologies was the largest shareholder of Empire State Realty Trust Inc (NYSE:ESRT), with a stake worth $71 million reported as of the end of March. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $20.1 million. Two Sigma Advisors, Balyasny Asset Management, and AEW Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Empire State Realty Trust Inc (NYSE:ESRT) has faced a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of fund managers who sold off their full holdings by the end of the second quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $12.1 million in stock. Eduardo Abush’s fund, Waterfront Capital Partners, also cut its stock, about $10.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Empire State Realty Trust Inc (NYSE:ESRT) but similarly valued. These stocks are Affiliated Managers Group, Inc. (NYSE:AMG), ADT Inc.(NYSE:ADT), Tilray, Inc. (NASDAQ:TLRY), and Luckin Coffee Inc. (NASDAQ:LK). This group of stocks’ market values are closest to ESRT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMG 20 383803 -3
ADT 20 157383 4
TLRY 11 26085 1
LK 31 378737 31
Average 20.5 236502 8.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $142 million in ESRT’s case. Luckin Coffee Inc. (NASDAQ:LK) is the most popular stock in this table. On the other hand Tilray, Inc. (NASDAQ:TLRY) is the least popular one with only 11 bullish hedge fund positions. Empire State Realty Trust Inc (NYSE:ESRT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ESRT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ESRT investors were disappointed as the stock returned -3% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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