We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Select Income REIT (NYSE:SIR).
With a Price/Book ratio of 0.8 and a dividend yield of 7.75%, Select Income REIT (NYSE:SIR)’s stock is down by 21% since the beginning of the year. Moreover, the smart money is turning less bullish and the number of long hedge fund positions was trimmed by 2 recently. At the end of this article we will also compare SIR to other stocks, including Washington Real Estate Investment Trust (NYSE:WRE), Holly Energy Partners, L.P. (NYSE:HEP), and Tessera Technologies, Inc. (NASDAQ:TSRA) to get a better sense of its popularity.
In the financial world there are a lot of signals market participants have at their disposal to appraise their holdings. Two of the most innovative signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a superb amount (see the details here).
Keeping this in mind, we’re going to go over the recent action surrounding Select Income REIT (NYSE:SIR).
Hedge fund activity in Select Income REIT (NYSE:SIR)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, down by 13% on the quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Echo Street Capital Management, managed by Greg Poole, holds the number one position in Select Income REIT (NYSE:SIR). Echo Street Capital Management has a $33.8 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is J. Alan Reid, Jr.’s Forward Management, with a $19 million position; 1.5% of its 13F portfolio is allocated to the stock. The remaining peers that hold long positions comprise Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, David Brown’s Hawk Ridge Management, and John Overdeck and David Siegel’s Two Sigma Advisors.