“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Easterly Government Properties Inc (NYSE:DEA).
Easterly Government Properties Inc (NYSE:DEA) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that DEA isn’t among the 30 most popular stocks among hedge funds.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.
We’re going to take a look at the key hedge fund action encompassing Easterly Government Properties Inc (NYSE:DEA).
How have hedgies been trading Easterly Government Properties Inc (NYSE:DEA)?
Heading into the first quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DEA over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Easterly Government Properties Inc (NYSE:DEA) was held by Zimmer Partners, which reported holding $52.2 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $33.8 million position. Other investors bullish on the company included AEW Capital Management, Citadel Investment Group, and Springbok Capital.
Because Easterly Government Properties Inc (NYSE:DEA) has faced declining sentiment from the smart money, we can see that there were a few funds that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $12 million in stock. Matthew Halbower’s fund, Pentwater Capital Management, also dumped its stock, about $0.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Easterly Government Properties Inc (NYSE:DEA) but similarly valued. We will take a look at Goosehead Insurance, Inc. (NASDAQ:GSHD), Harmony Gold Mining Company Limited (NYSE:HMY), Solid Biosciences Inc. (NASDAQ:SLDB), and National Bank Holdings Corp (NYSE:NBHC). This group of stocks’ market caps are closest to DEA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSHD | 3 | 8605 | -1 |
| HMY | 7 | 19643 | 0 |
| SLDB | 11 | 284601 | -6 |
| NBHC | 10 | 86835 | 1 |
| Average | 7.75 | 99921 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $122 million in DEA’s case. Solid Biosciences Inc. (NASDAQ:SLDB) is the most popular stock in this table. On the other hand Goosehead Insurance, Inc. (NASDAQ:GSHD) is the least popular one with only 3 bullish hedge fund positions. Easterly Government Properties Inc (NYSE:DEA) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately DEA wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); DEA investors were disappointed as the stock returned 13.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
