Hedge Funds Have Never Been More Bullish On Duke Realty Corporation (DRE)

We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of Duke Realty Corporation (NYSE:DRE) based on that data.

Is Duke Realty Corporation (NYSE:DRE) a buy here? The smart money is becoming more confident. The number of long hedge fund positions moved up by 7 recently. Our calculations also showed that DRE isn’t among the 30 most popular stocks among hedge funds. DRE was in 23 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with DRE positions at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the recent hedge fund action regarding Duke Realty Corporation (NYSE:DRE).

How have hedgies been trading Duke Realty Corporation (NYSE:DRE)?

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DRE over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with DRE Positions

More specifically, AEW Capital Management was the largest shareholder of Duke Realty Corporation (NYSE:DRE), with a stake worth $130.6 million reported as of the end of March. Trailing AEW Capital Management was Millennium Management, which amassed a stake valued at $42.7 million. Renaissance Technologies, Balyasny Asset Management, and Long Pond Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers were breaking ground themselves. Long Pond Capital, managed by John Khoury, established the most outsized position in Duke Realty Corporation (NYSE:DRE). Long Pond Capital had $37.1 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $6.3 million position during the quarter. The other funds with brand new DRE positions are Daniel Johnson’s Gillson Capital, Mario Gabelli’s GAMCO Investors, and Michael Gelband’s ExodusPoint Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Duke Realty Corporation (NYSE:DRE) but similarly valued. These stocks are Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Leidos Holdings Inc (NYSE:LDOS), Telecom Italia S.p.A. (NYSE:TI), and Trimble Inc. (NASDAQ:TRMB). This group of stocks’ market caps are closest to DRE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NCLH 35 965515 0
LDOS 23 415779 2
TI 1 3257 0
TRMB 16 687865 2
Average 18.75 518104 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $518 million. That figure was $413 million in DRE’s case. Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) is the most popular stock in this table. On the other hand Telecom Italia S.p.A. (NYSE:TI) is the least popular one with only 1 bullish hedge fund positions. Duke Realty Corporation (NYSE:DRE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on DRE as the stock returned 8.2% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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