Hedge Funds Are Souring On Monmouth Real Estate Investment Corp. (MNR)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtMonmouth Real Estate Investment Corp. (NYSE:MNR) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Monmouth Real Estate Investment Corp. (NYSE:MNR) was in 12 hedge funds’ portfolios at the end of the first quarter of 2020. MNR shareholders have witnessed a decrease in hedge fund sentiment recently. There were 14 hedge funds in our database with MNR holdings at the end of the previous quarter. Our calculations also showed that MNR 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most market participants, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the upper echelon of this club, approximately 850 funds. These hedge fund managers control the lion’s share of all hedge funds’ total asset base, and by watching their matchless investments, Insider Monkey has identified several investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the fresh hedge fund action surrounding Monmouth Real Estate Investment Corp. (NYSE:MNR).

How have hedgies been trading Monmouth Real Estate Investment Corp. (NYSE:MNR)?

At Q1’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. By comparison, 9 hedge funds held shares or bullish call options in MNR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in Monmouth Real Estate Investment Corp. (NYSE:MNR) was held by Renaissance Technologies, which reported holding $38.5 million worth of stock at the end of September. It was followed by Millennium Management with a $9.6 million position. Other investors bullish on the company included Two Sigma Advisors, Citadel Investment Group, and GAMCO Investors. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Monmouth Real Estate Investment Corp. (NYSE:MNR), around 0.05% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to MNR.

Seeing as Monmouth Real Estate Investment Corp. (NYSE:MNR) has faced declining sentiment from the smart money, it’s safe to say that there were a few money managers who sold off their entire stakes last quarter. At the top of the heap, Minhua Zhang’s Weld Capital Management cut the largest investment of the 750 funds tracked by Insider Monkey, valued at close to $1.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Monmouth Real Estate Investment Corp. (NYSE:MNR). These stocks are Canada Goose Holdings Inc. (NYSE:GOOS), Banner Corporation (NASDAQ:BANR), Harmony Gold Mining Company Limited (NYSE:HMY), and National Research Corporation (NASDAQ:NRC). All of these stocks’ market caps are similar to MNR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GOOS 26 220589 6
BANR 15 54121 3
HMY 9 39467 -3
NRC 8 41203 -1
Average 14.5 88845 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $62 million in MNR’s case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand National Research Corporation (NASDAQ:NRC) is the least popular one with only 8 bullish hedge fund positions. Monmouth Real Estate Investment Corp. (NYSE:MNR) is not the least popular stock in this group but hedge fund interest is still below 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on MNR, though not to the same extent, as the stock returned 22% during the second quarter and outperformed the market.

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