A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on W.P. Carey Inc. REIT (NYSE:WPC).
W.P. Carey Inc. (NYSE:WPC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of December. At the end of this article we will also compare WPC to other stocks including Invitation Homes Inc. (NYSE:INVH), InterContinental Hotels Group PLC (NYSE:IHG), and Enel Americas S.A. (NYSE:ENIA) to get a better sense of its popularity.
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 check out the new hedge fund action surrounding W.P. Carey Inc. (NYSE:WPC).
What have hedge funds been doing with W.P. Carey Inc. (NYSE:WPC)?
Heading into the first quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2018. On the other hand, there were a total of 12 hedge funds with a bullish position in WPC a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Two Sigma Advisors held the most valuable stake in W.P. Carey Inc. (NYSE:WPC), which was worth $24.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $13.4 million worth of shares. Moreover, Renaissance Technologies, PEAK6 Capital Management, and AQR Capital Management were also bullish on W.P. Carey Inc. (NYSE:WPC), allocating a large percentage of their portfolios to this stock.
Because W.P. Carey Inc. (NYSE:WPC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds who sold off their full holdings last quarter. Interestingly, Israel Englander’s Millennium Management cut the biggest position of all the hedgies watched by Insider Monkey, totaling about $1.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $0.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as W.P. Carey Inc. (NYSE:WPC) but similarly valued. These stocks are Invitation Homes Inc. (NYSE:INVH), InterContinental Hotels Group PLC (NYSE:IHG), Enel Americas S.A. (NYSE:ENIA), and Dover Corporation (NYSE:DOV). This group of stocks’ market values resemble WPC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $49 million in WPC’s case. Dover Corporation (NYSE:DOV) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 7 bullish hedge fund positions. W.P. Carey Inc. (NYSE:WPC) 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 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on WPC, though not to the same extent, as the stock returned 18% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.