In this article you are going to find out whether hedge funds think Saul Centers Inc (NYSE:BFS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. 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 predict the winners in the stock market.
Is BFS a good stock to buy now? Saul Centers Inc (NYSE:BFS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that BFS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as ARMOUR Residential REIT, Inc. (NYSE:ARR), Ready Capital Corporation (NYSE:RC), and Inozyme Pharma, Inc. (NASDAQ:INZY) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. Keeping this in mind let’s take a gander at the new hedge fund action regarding Saul Centers Inc (NYSE:BFS).
Hedge fund activity in Saul Centers Inc (NYSE:BFS)
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. By comparison, 13 hedge funds held shares or bullish call options in BFS a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Saul Centers Inc (NYSE:BFS), which was worth $11.6 million at the end of the third quarter. On the second spot was V3 Capital which amassed $8.5 million worth of shares. AQR Capital Management, Millennium Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position V3 Capital allocated the biggest weight to Saul Centers Inc (NYSE:BFS), around 1.95% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to BFS.
Due to the fact that Saul Centers Inc (NYSE:BFS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds that slashed their entire stakes heading into Q4. It’s worth mentioning that David Harding’s Winton Capital Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth about $2.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.5 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Saul Centers Inc (NYSE:BFS) but similarly valued. We will take a look at ARMOUR Residential REIT, Inc. (NYSE:ARR), Ready Capital Corporation (NYSE:RC), Inozyme Pharma, Inc. (NASDAQ:INZY), Cellcom Israel Ltd. (NYSE:CEL), Knoll Inc (NYSE:KNL), Glatfelter Corporation (NYSE:GLT), and Goldman Sachs BDC, Inc. (NYSE:GSBD). This group of stocks’ market values resemble BFS’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 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $23 million in BFS’s case. Inozyme Pharma, Inc. (NASDAQ:INZY) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 2 bullish hedge fund positions. Saul Centers Inc (NYSE:BFS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BFS is 43.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on BFS as the stock returned 24.5% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.