At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Brandywine Realty Trust (NYSE:BDN) makes for a good investment right now.
Is Brandywine Realty Trust (NYSE:BDN) a buy right now? The smart money is taking a bearish view. The number of bullish hedge fund positions dropped by 1 recently. Our calculations also showed that BDN isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 40 percentage points since May 2014 through May 30, 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the recent hedge fund action encompassing Brandywine Realty Trust (NYSE:BDN).
What have hedge funds been doing with Brandywine Realty Trust (NYSE:BDN)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the first quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in BDN a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eduardo Abush’s Waterfront Capital Partners has the biggest position in Brandywine Realty Trust (NYSE:BDN), worth close to $25.3 million, comprising 4.2% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $24.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and J. Alan Reid, Jr.’s Forward Management.
Judging by the fact that Brandywine Realty Trust (NYSE:BDN) has experienced bearish sentiment from the smart money, we can see that there was a specific group of fund managers who sold off their full holdings in the second quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest stake of all the hedgies watched by Insider Monkey, worth about $8.4 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $7.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let’s check out hedge fund activity in other stocks similar to Brandywine Realty Trust (NYSE:BDN). We will take a look at Lions Gate Entertainment Corp. (NYSE:LGF-A), Spectrum Brands Holdings, Inc. (NYSE:SPB), CRISPR Therapeutics AG (NASDAQ:CRSP), and Adtalem Global Education Inc. (NYSE:ATGE). This group of stocks’ market values match BDN’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 18 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $92 million in BDN’s case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand CRISPR Therapeutics AG (NASDAQ:CRSP) is the least popular one with only 13 bullish hedge fund positions. Brandywine Realty Trust (NYSE:BDN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on BDN as the stock returned 7.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.