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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Retail Properties of America Inc (NYSE:RPAI) based on those filings.
Is Retail Properties of America Inc (NYSE:RPAI) going to take off soon? Money managers are selling. The number of long hedge fund bets shrunk by 1 lately. Our calculations also showed that RPAI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). RPAI was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. There were 21 hedge funds in our database with RPAI holdings at the end of the previous quarter.
Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stuart Zimmer of Zimmer Partners
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. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the fresh hedge fund action regarding Retail Properties of America Inc (NYSE:RPAI).
How are hedge funds trading Retail Properties of America Inc (NYSE:RPAI)?
Heading into the second quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in RPAI a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Retail Properties of America Inc (NYSE:RPAI), worth close to $34 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is GLG Partners, led by Noam Gottesman, holding a $7.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Dmitry Balyasny’s Balyasny Asset Management, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Retail Properties of America Inc (NYSE:RPAI), around 0.46% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.11 percent of its 13F equity portfolio to RPAI.
Seeing as Retail Properties of America Inc (NYSE:RPAI) has faced a decline in interest from the smart money, logic holds that there was a specific group of hedge funds who were dropping their entire stakes by the end of the first quarter. Interestingly, Stuart J. Zimmer’s Zimmer Partners cut the biggest position of all the hedgies followed by Insider Monkey, worth an estimated $31.8 million in stock, and Mark Coe’s Intrinsic Edge Capital was right behind this move, as the fund dumped about $3.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Retail Properties of America Inc (NYSE:RPAI) but similarly valued. These stocks are O-I Glass, Inc. (NYSE:OI), Axos Financial, Inc. (NYSE:AX), Heartland Financial USA Inc (NASDAQ:HTLF), and James River Group Holdings Ltd (NASDAQ:JRVR). All of these stocks’ market caps are closest to RPAI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OI | 29 | 255135 | 9 |
| AX | 12 | 43447 | -3 |
| HTLF | 6 | 6048 | -2 |
| JRVR | 13 | 72712 | 3 |
| Average | 15 | 94336 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $75 million in RPAI’s case. O-I Glass, Inc. (NYSE:OI) is the most popular stock in this table. On the other hand Heartland Financial USA Inc (NASDAQ:HTLF) is the least popular one with only 6 bullish hedge fund positions. Retail Properties of America Inc (NYSE:RPAI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on RPAI as the stock returned 32.3% in Q2 (through June 17th) 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.
