At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Boston Properties, Inc. (NYSE:BXP) makes for a good investment right now.
Boston Properties, Inc. (NYSE:BXP) has experienced a decrease in hedge fund interest lately. Boston Properties, Inc. (NYSE:BXP) was in 27 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that BXP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by 115 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 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.
Chris Hohn
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. Now we’re going to take a glance at the fresh hedge fund action encompassing Boston Properties, Inc. (NYSE:BXP).
Do Hedge Funds Think BXP Is A Good Stock To Buy Now?
At first quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BXP over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, TCI Fund Management was the largest shareholder of Boston Properties, Inc. (NYSE:BXP), with a stake worth $886.4 million reported as of the end of March. Trailing TCI Fund Management was Renaissance Technologies, which amassed a stake valued at $47.3 million. Adage Capital Management, Citadel Investment Group, and Gillson Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position TCI Fund Management allocated the biggest weight to Boston Properties, Inc. (NYSE:BXP), around 2.57% of its 13F portfolio. Amitell Capital is also relatively very bullish on the stock, earmarking 2.53 percent of its 13F equity portfolio to BXP.
Because Boston Properties, Inc. (NYSE:BXP) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds who sold off their positions entirely in the first quarter. It’s worth mentioning that Richard Mashaal’s Rima Senvest Management cut the biggest position of the 750 funds watched by Insider Monkey, comprising close to $24.7 million in stock, and David Fear’s Thunderbird Partners was right behind this move, as the fund cut about $22.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds in the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Boston Properties, Inc. (NYSE:BXP) but similarly valued. We will take a look at Brookfield Infrastructure Partners L.P. (NYSE:BIP), Wix.Com Ltd (NASDAQ:WIX), Markel Corporation (NYSE:MKL), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Duke Realty Corporation (NYSE:DRE), Zendesk Inc (NYSE:ZEN), and WPP Plc (NASDAQ:WPP). All of these stocks’ market caps resemble BXP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIP | 12 | 47729 | -2 |
| WIX | 40 | 1461252 | 3 |
| MKL | 30 | 654208 | -6 |
| CHKP | 31 | 494577 | 5 |
| DRE | 20 | 279688 | 3 |
| ZEN | 45 | 1483992 | -13 |
| WPP | 5 | 34389 | -1 |
| Average | 26.1 | 636548 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $637 million. That figure was $1058 million in BXP’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 5 bullish hedge fund positions. Boston Properties, Inc. (NYSE:BXP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BXP is 52. 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 BXP, though not to the same extent, as the stock returned 16.7% since Q1 (through July 9th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
