Is Lexington Realty Trust (NYSE:LXP) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the winners in the stock market.
Lexington Realty Trust (NYSE:LXP) investors should be aware of an increase in enthusiasm from smart money in recent months. Our calculations also showed that lxp isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a look at the latest hedge fund action surrounding Lexington Realty Trust (NYSE:LXP).
What have hedge funds been doing with Lexington Realty Trust (NYSE:LXP)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in LXP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Forward Management was the largest shareholder of Lexington Realty Trust (NYSE:LXP), with a stake worth $15.6 million reported as of the end of September. Trailing Forward Management was Millennium Management, which amassed a stake valued at $7.5 million. Balyasny Asset Management, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Now, some big names were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, initiated the most valuable position in Lexington Realty Trust (NYSE:LXP). Renaissance Technologies had $1.7 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $0.5 million investment in the stock during the quarter. The other funds with brand new LXP positions are Ronald Hua’s Qtron Investments, Jeffrey Talpins’s Element Capital Management, and Andrew Weiss’s Weiss Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Lexington Realty Trust (NYSE:LXP) but similarly valued. These stocks are Altair Engineering Inc. (NASDAQ:ALTR), SeaWorld Entertainment Inc (NYSE:SEAS), Acadia Realty Trust (NYSE:AKR), and Trinseo S.A. (NYSE:TSE). This group of stocks’ market values match LXP’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $41 million in LXP’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Acadia Realty Trust (NYSE:AKR) is the least popular one with only 11 bullish hedge fund positions. Lexington Realty Trust (NYSE:LXP) 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 LXP wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); LXP investors were disappointed as the stock returned 9.3% 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.