Hedge Funds Are Souring On Digital Realty Trust, Inc. (DLR)

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. Insider Monkey finished processing 867 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2021. In this article we are going to take a look at smart money sentiment towards Digital Realty Trust, Inc. (NYSE:DLR).

Digital Realty Trust, Inc. (NYSE:DLR) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. DLR shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 30 hedge funds in our database with DLR positions at the end of the second quarter. Our calculations also showed that DLR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s go over the new hedge fund action surrounding Digital Realty Trust, Inc. (NYSE:DLR).

Robert Atchinson of Adage Capital Management

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

At the end of September, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in DLR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Digital Realty Trust, Inc. (NYSE:DLR) was held by Jasper Ridge Partners, which reported holding $94.2 million worth of stock at the end of September. It was followed by Adage Capital Management with a $43.2 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Jasper Ridge Partners allocated the biggest weight to Digital Realty Trust, Inc. (NYSE:DLR), around 4.05% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 2.4 percent of its 13F equity portfolio to DLR.

Judging by the fact that Digital Realty Trust, Inc. (NYSE:DLR) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $12.5 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also sold off its stock, about $5.1 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Digital Realty Trust, Inc. (NYSE:DLR) but similarly valued. We will take a look at Walgreens Boots Alliance Inc (NASDAQ:WBA), Pioneer Natural Resources Company (NYSE:PXD), American Electric Power Company, Inc. (NASDAQ:AEP), Prudential Financial Inc (NYSE:PRU), Koninklijke Philips NV (NYSE:PHG), Paychex, Inc. (NASDAQ:PAYX), and Electronic Arts Inc. (NASDAQ:EA). All of these stocks’ market caps are similar to DLR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WBA 37 850173 -4
PXD 48 958649 3
AEP 36 751595 7
PRU 33 460021 5
PHG 11 79466 1
PAYX 34 1115089 5
EA 53 1097032 -3
Average 36 758861 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $759 million. That figure was $254 million in DLR’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Digital Realty Trust, Inc. (NYSE:DLR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DLR is 47.9. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on DLR as the stock returned 15.1% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.

Follow Digital Realty Trust Inc. (NYSE:DLR)

Suggested Articles:

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