Here is What Hedge Funds Think About Digital Realty Trust, Inc. (DLR)

Digital Realty Trust, Inc. (NYSE:DLR) has experienced a decrease in activity from the world’s largest hedge funds of late.

If you’d ask most market participants, hedge funds are seen as worthless, old financial tools of years past. While there are over 8000 funds with their doors open at the moment, we hone in on the aristocrats of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their best investments, we have found a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Digital Realty Trust, Inc. (NYSE:DLR)

Just as integral, positive insider trading sentiment is another way to parse down the marketplace. There are plenty of motivations for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this tactic if “monkeys” know where to look (learn more here).

Consequently, it’s important to take a gander at the key action regarding Digital Realty Trust, Inc. (NYSE:DLR).

How are hedge funds trading Digital Realty Trust, Inc. (NYSE:DLR)?

In preparation for this quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -25% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Forward Management, managed by J. Alan Reid, Jr., holds the largest position in Digital Realty Trust, Inc. (NYSE:DLR). Forward Management has a $19.5 million position in the stock, comprising 1.2% of its 13F portfolio. On Forward Management’s heels is Ken Griffin of Citadel Investment Group, with a $16.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Matthew Knauer and Mina Faltas’s Nokota Management, Israel Englander’s Millennium Management and Dmitry Balyasny’s Balyasny Asset Management.

Seeing as Digital Realty Trust, Inc. (NYSE:DLR) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who were dropping their positions entirely last quarter. Intriguingly, Steven Cohen’s SAC Capital Advisors sold off the largest investment of the “upper crust” of funds we monitor, worth an estimated $22.2 million in stock., and Brian Taylor of Pine River Capital Management was right behind this move, as the fund said goodbye to about $16.6 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.

What do corporate executives and insiders think about Digital Realty Trust, Inc. (NYSE:DLR)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, Digital Realty Trust, Inc. (NYSE:DLR) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Digital Realty Trust, Inc. (NYSE:DLR). These stocks are Piedmont Office Realty Trust, Inc. (NYSE:PDM), Kilroy Realty Corp (NYSE:KRC), Alexandria Real Estate Equities Inc (NYSE:ARE), Liberty Property Trust (NYSE:LRY), and Boston Properties, Inc. (NYSE:BXP). This group of stocks are in the reit – office industry and their market caps are similar to DLR’s market cap.