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Hedge Funds Nibbling On Whitestone REIT (WSR)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Whitestone REIT (NYSE:WSR) based on those filings.

Is Whitestone REIT (NYSE:WSR) undervalued? Money managers are betting on the stock. The number of long hedge fund bets increased by 1 recently. Our calculations also showed that WSR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the recent hedge fund action regarding Whitestone REIT (NYSE:WSR).

What have hedge funds been doing with Whitestone REIT (NYSE:WSR)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in WSR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is WSR A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Whitestone REIT (NYSE:WSR), which was worth $12.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $0.9 million worth of shares. Citadel Investment Group, Winton Capital Management, and Tudor Investment Corp 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 Tudor Investment Corp allocated the biggest weight to Whitestone REIT (NYSE:WSR), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to WSR.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Whitestone REIT (NYSE:WSR). Arrowstreet Capital had $0.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.5 million position during the quarter. The only other fund with a brand new WSR position is Paul Tudor Jones’s Tudor Investment Corp.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Whitestone REIT (NYSE:WSR) but similarly valued. We will take a look at American National BankShares Inc (NASDAQ:AMNB), Source Capital, Inc. (NYSE:SOR), ACNB Corporation (NASDAQ:ACNB), and Gladstone Investment Corporation (NASDAQ:GAIN). This group of stocks’ market values are similar to WSR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMNB 3 5655 1
SOR 4 12484 2
ACNB 2 3264 1
GAIN 8 6075 0
Average 4.25 6870 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $14 million in WSR’s case. Gladstone Investment Corporation (NASDAQ:GAIN) is the most popular stock in this table. On the other hand ACNB Corporation (NASDAQ:ACNB) is the least popular one with only 2 bullish hedge fund positions. Whitestone REIT (NYSE:WSR) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately WSR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on WSR were disappointed as the stock returned 0.4% 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.