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Hedge Funds Are Selling Mack Cali Realty Corp (CLI)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Mack Cali Realty Corp (NYSE:CLI).

Mack Cali Realty Corp (NYSE:CLI) was in 11 hedge funds’ portfolios at the end of the third quarter of 2018. CLI investors should be aware of a decrease in hedge fund sentiment recently. There were 14 hedge funds in our database with CLI positions at the end of the previous quarter. Our calculations also showed that CLI isn’t among the 30 most popular stocks among hedge funds.

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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

Let’s analyze the fresh hedge fund action surrounding Mack Cali Realty Corp (NYSE:CLI).

How are hedge funds trading Mack Cali Realty Corp (NYSE:CLI)?

Heading into the fourth quarter of 2018, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the second quarter of 2018. On the other hand, there were a total of 15 hedge funds with a bullish position in CLI at the beginning of this year. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

CLI_dec2018

More specifically, Renaissance Technologies was the largest shareholder of Mack Cali Realty Corp (NYSE:CLI), with a stake worth $84.8 million reported as of the end of September. Trailing Renaissance Technologies was Land & Buildings Investment Management, which amassed a stake valued at $8.2 million. Fisher Asset Management, Waterfront Capital Partners, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Mack Cali Realty Corp (NYSE:CLI) has experienced a decline in interest from the smart money, logic holds that there exists a select few fund managers who were dropping their positions entirely heading into Q3. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $6.8 million in call options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its call options, about $0.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds heading into Q3.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mack Cali Realty Corp (NYSE:CLI) but similarly valued. These stocks are MSG Networks Inc (NYSE:MSGN), Shenandoah Telecommunications Company (NASDAQ:SHEN), Brinker International, Inc. (NYSE:EAT), and Euronav NV (NYSE:EURN). All of these stocks’ market caps are similar to CLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSGN 23 383172 0
SHEN 14 72514 8
EAT 26 196941 6
EURN 16 186535 -1
Average 19.75 209791 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $114 million in CLI’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand Shenandoah Telecommunications Company (NASDAQ:SHEN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Mack Cali Realty Corp (NYSE:CLI) is even less popular than SHEN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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