We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like American Assets Trust, Inc (NYSE:AAT).
American Assets Trust, Inc (NYSE:AAT) investors should be aware of an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that AAT isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, 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. We’re going to take a gander at the key hedge fund action regarding American Assets Trust, Inc (NYSE:AAT).
How have hedgies been trading American Assets Trust, Inc (NYSE:AAT)?
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in AAT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AEW Capital Management, managed by Jeffrey Furber, holds the number one position in American Assets Trust, Inc (NYSE:AAT). AEW Capital Management has a $77.5 million position in the stock, comprising 2.4% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $23.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Eduardo Abush’s Waterfront Capital Partners, Jeffrey Talpins’s Element Capital Management and Noam Gottesman’s GLG Partners.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Waterfront Capital Partners, managed by Eduardo Abush, assembled the most outsized position in American Assets Trust, Inc (NYSE:AAT). Waterfront Capital Partners had $12.4 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also made a $5 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Hulsizer’s PEAK6 Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as American Assets Trust, Inc (NYSE:AAT) but similarly valued. These stocks are Agios Pharmaceuticals Inc (NASDAQ:AGIO), AVX Corporation (NYSE:AVX), Tenable Holdings, Inc. (NASDAQ:TENB), and Finisar Corporation (NASDAQ:FNSR). This group of stocks’ market valuations are closest to AAT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $128 million in AAT’s case. Agios Pharmaceuticals Inc (NASDAQ:AGIO) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 11 bullish hedge fund positions. American Assets Trust, Inc (NYSE:AAT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AAT investors were disappointed as the stock returned -0.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.