Hedge Funds Can’t Stop Buying First Industrial Realty Trust, Inc. (FR)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of First Industrial Realty Trust, Inc. (NYSE:FR) based on that data and determine whether they were really smart about the stock.

Is First Industrial Realty Trust, Inc. (NYSE:FR) a healthy stock for your portfolio? The best stock pickers were taking a bullish view. The number of bullish hedge fund positions improved by 6 lately. First Industrial Realty Trust, Inc. (NYSE:FR) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 we’re going to take a peek at the new hedge fund action regarding First Industrial Realty Trust, Inc. (NYSE:FR).

How have hedgies been trading First Industrial Realty Trust, Inc. (NYSE:FR)?

At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FR over the last 20 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

More specifically, Long Pond Capital was the largest shareholder of First Industrial Realty Trust, Inc. (NYSE:FR), with a stake worth $109 million reported as of the end of September. Trailing Long Pond Capital was Millennium Management, which amassed a stake valued at $69.3 million. Waterfront Capital Partners, Balyasny Asset Management, and Land & Buildings Investment 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 Toscafund Asset Management allocated the biggest weight to First Industrial Realty Trust, Inc. (NYSE:FR), around 11.74% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, dishing out 6.44 percent of its 13F equity portfolio to FR.

Now, some big names were breaking ground themselves. Toscafund Asset Management, managed by Martin Hughes, assembled the biggest position in First Industrial Realty Trust, Inc. (NYSE:FR). Toscafund Asset Management had $7.1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $7 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Matthew Crandall Gilman’s Hill Winds Capital, and Schonfeld Strategic Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as First Industrial Realty Trust, Inc. (NYSE:FR) but similarly valued. We will take a look at Novavax, Inc. (NASDAQ:NVAX), Oshkosh Corporation (NYSE:OSK), Sasol Limited (NYSE:SSL), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), The Wendy’s Company (NASDAQ:WEN), Marathon Oil Corporation (NYSE:MRO), and Jabil Inc. (NYSE:JBL). This group of stocks’ market valuations resemble FR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVAX 18 733714 14
OSK 27 206936 5
SSL 10 35736 1
AVAL 9 12468 4
WEN 32 1106601 -3
MRO 26 313727 2
JBL 31 375953 11
Average 21.9 397876 4.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $356 million in FR’s case. The Wendy’s Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is the least popular one with only 9 bullish hedge fund positions. First Industrial Realty Trust, Inc. (NYSE:FR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FR is 85.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately FR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FR were disappointed as the stock returned 7.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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