Here is What Hedge Funds Think About Equity Residential (EQR)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Equity Residential (NYSE:EQR) changed recently.

Equity Residential (NYSE:EQR) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Equity Residential (NYSE:EQR) was in 23 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. There were 28 hedge funds in our database with EQR positions at the end of the fourth quarter. Our calculations also showed that EQR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most shareholders, hedge funds are seen as slow, outdated investment vehicles of years past. While there are more than 8000 funds in operation today, We choose to focus on the elite of this group, approximately 850 funds. It is estimated that this group of investors orchestrate the majority of the hedge fund industry’s total capital, and by paying attention to their matchless stock picks, Insider Monkey has found several investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Howard Marks of Oaktree Capital

Howard Marks of Oaktree Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to view the recent hedge fund action regarding Equity Residential (NYSE:EQR).

Do Hedge Funds Think EQR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in EQR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, John Khoury’s Long Pond Capital has the most valuable position in Equity Residential (NYSE:EQR), worth close to $126.6 million, corresponding to 4.3% of its total 13F portfolio. On Long Pond Capital’s heels is Holocene Advisors, managed by Brandon Haley, which holds a $78.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Howard Marks’s Oaktree Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Equity Residential (NYSE:EQR), around 6.65% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, earmarking 4.32 percent of its 13F equity portfolio to EQR.

Due to the fact that Equity Residential (NYSE:EQR) has witnessed declining sentiment from the smart money, logic holds that there was a specific group of money managers that decided to sell off their positions entirely heading into Q2. At the top of the heap, Kevin D. Eng’s Columbus Hill Capital Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $17.8 million in stock. Charles Fitzgerald’s fund, V3 Capital, also cut its stock, about $13.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds heading into Q2.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Equity Residential (NYSE:EQR) but similarly valued. We will take a look at Keysight Technologies Inc (NYSE:KEYS), Fifth Third Bancorp (NASDAQ:FITB), Weyerhaeuser Co. (NYSE:WY), SVB Financial Group (NASDAQ:SIVB), MPLX LP (NYSE:MPLX), CBRE Group, Inc. (NYSE:CBRE), and Royalty Pharma Plc (NASDAQ:RPRX). This group of stocks’ market values resemble EQR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KEYS 32 529652 5
FITB 38 401275 -5
WY 38 641353 -2
SIVB 49 1213261 18
MPLX 8 136195 -5
CBRE 30 2600509 -1
RPRX 26 1835240 8
Average 31.6 1051069 2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1051 million. That figure was $359 million in EQR’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 8 bullish hedge fund positions. Equity Residential (NYSE:EQR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EQR is 39.2. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on EQR, though not to the same extent, as the stock returned 17.8% since the end of Q1 (through July 16th) and outperformed the market.

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