How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Cedar Realty Trust Inc (NYSE:CDR).
Is CDR a good stock to buy? The best stock pickers were in a bearish mood. The number of long hedge fund positions dropped by 1 lately. Cedar Realty Trust Inc (NYSE:CDR) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 15. Our calculations also showed that CDR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with CDR positions at the end of the fourth quarter.
In today’s marketplace there are dozens of gauges stock market investors employ to size up stocks. Two of the most innovative gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top investment managers can outpace the broader indices by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
David Nierenberg of Nierenberg Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a look at the fresh hedge fund action regarding Cedar Realty Trust Inc (NYSE:CDR).
Do Hedge Funds Think CDR Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2020. On the other hand, there were a total of 9 hedge funds with a bullish position in CDR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in Cedar Realty Trust Inc (NYSE:CDR), which was worth $3.6 million at the end of the fourth quarter. On the second spot was Barington Capital Group which amassed $3.1 million worth of shares. Cruiser Capital Advisors, Renaissance Technologies, and Two Sigma Advisors 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 Barington Capital Group allocated the biggest weight to Cedar Realty Trust Inc (NYSE:CDR), around 3.26% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, dishing out 2.12 percent of its 13F equity portfolio to CDR.
Seeing as Cedar Realty Trust Inc (NYSE:CDR) has faced falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that elected to cut their positions entirely heading into Q2. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the 750 funds followed by Insider Monkey, worth about $0.6 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q2.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cedar Realty Trust Inc (NYSE:CDR) but similarly valued. These stocks are The Community Financial Corp (NASDAQ:TCFC), BayCom Corp (NASDAQ:BCML), Sequans Communications SA (NYSE:SQNS), SharpSpring, Inc. (NASDAQ:SHSP), Opthea Limited (NASDAQ:OPT), Mastech Digital, Inc. (NYSE:MHH), and Points International Ltd (NASDAQ:PCOM). This group of stocks’ market values resemble CDR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCFC | 3 | 24179 | 0 |
| BCML | 4 | 20863 | 1 |
| SQNS | 9 | 29833 | 1 |
| SHSP | 10 | 36090 | -2 |
| OPT | 3 | 33900 | -2 |
| MHH | 3 | 4262 | -2 |
| PCOM | 6 | 29606 | -1 |
| Average | 5.4 | 25533 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $12 million in CDR’s case. SharpSpring, Inc. (NASDAQ:SHSP) is the most popular stock in this table. On the other hand The Community Financial Corp (NASDAQ:TCFC) is the least popular one with only 3 bullish hedge fund positions. Cedar Realty Trust Inc (NYSE:CDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CDR is 37.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on CDR as the stock returned 16.9% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
