We can judge whether Eastgroup Properties Inc (NYSE:EGP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Eastgroup Properties Inc (NYSE:EGP) was in 10 hedge funds’ portfolios at the end of September. EGP shareholders have witnessed a decrease in hedge fund sentiment lately. There were 12 hedge funds in our database with EGP positions at the end of the previous quarter. Our calculations also showed that EGP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the key hedge fund action encompassing Eastgroup Properties Inc (NYSE:EGP).
How have hedgies been trading Eastgroup Properties Inc (NYSE:EGP)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in EGP 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.
Among these funds, Millennium Management held the most valuable stake in Eastgroup Properties Inc (NYSE:EGP), which was worth $8.2 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $5.3 million worth of shares. Balyasny Asset Management, AQR Capital Management, and Winton Capital Management 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 Qtron Investments allocated the biggest weight to Eastgroup Properties Inc (NYSE:EGP), around 0.12% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to EGP.
Since Eastgroup Properties Inc (NYSE:EGP) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings last quarter. It’s worth mentioning that Renaissance Technologies said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, valued at about $10.9 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund dumped about $1.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Eastgroup Properties Inc (NYSE:EGP). These stocks are Black Hills Corporation (NYSE:BKH), Essent Group Ltd (NYSE:ESNT), Penumbra Inc (NYSE:PEN), and Air Lease Corp (NYSE:AL). This group of stocks’ market caps are similar to EGP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BKH | 19 | 186727 | 3 |
| ESNT | 23 | 301615 | -7 |
| PEN | 23 | 374880 | 4 |
| AL | 23 | 442179 | 5 |
| Average | 22 | 326350 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $24 million in EGP’s case. Essent Group Ltd (NYSE:ESNT) is the most popular stock in this table. On the other hand Black Hills Corporation (NYSE:BKH) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Eastgroup Properties Inc (NYSE:EGP) is even less popular than BKH. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on EGP, though not to the same extent, as the stock returned 8.9% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
