The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Corporate Office Properties Trust (NYSE:OFC).
Corporate Office Properties Trust (NYSE:OFC) investors should be aware of a decrease in hedge fund sentiment recently. Our calculations also showed that OFC isn’t among the 30 most popular stocks among hedge funds.
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.
We’re going to analyze the fresh hedge fund action regarding Corporate Office Properties Trust (NYSE:OFC).
What does smart money think about Corporate Office Properties Trust (NYSE:OFC)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -48% from the fourth quarter of 2018. By comparison, 16 hedge funds held shares or bullish call options in OFC a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, AEW Capital Management was the largest shareholder of Corporate Office Properties Trust (NYSE:OFC), with a stake worth $43.8 million reported as of the end of March. Trailing AEW Capital Management was Renaissance Technologies, which amassed a stake valued at $31.5 million. Winton Capital Management, Balyasny Asset Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Because Corporate Office Properties Trust (NYSE:OFC) has faced bearish sentiment from the smart money, we can see that there was a specific group of funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth an estimated $14.5 million in stock. Eduardo Abush’s fund, Waterfront Capital Partners, also cut its stock, about $6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 11 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Corporate Office Properties Trust (NYSE:OFC). These stocks are Louisiana-Pacific Corporation (NYSE:LPX), Tenable Holdings, Inc. (NASDAQ:TENB), Houlihan Lokey Inc (NYSE:HLI), and Magnolia Oil & Gas Corporation (NYSE:MGY). This group of stocks’ market caps are closest to OFC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPX | 28 | 461781 | -3 |
| TENB | 20 | 153935 | 5 |
| HLI | 14 | 132102 | -4 |
| MGY | 32 | 232014 | 0 |
| Average | 23.5 | 244958 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $157 million in OFC’s case. Magnolia Oil & Gas Corporation (NYSE:MGY) is the most popular stock in this table. On the other hand Houlihan Lokey Inc (NYSE:HLI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Corporate Office Properties Trust (NYSE:OFC) is even less popular than HLI. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on OFC, though not to the same extent, as the stock returned 5.9% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
