Is EPR Properties (EPR) Going to Burn These Hedge Funds?: Alexander’s, Inc. (ALX), Tanger Factory Outlet Centers Inc. (SKT)

EPR Properties (NYSE:EPR) was in 9 hedge funds’ portfolio at the end of the fourth quarter of 2012. EPR shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 13 hedge funds in our database with EPR positions at the end of the previous quarter.

EPR Properties (NYSE:EPR)In the eyes of most traders, hedge funds are seen as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds in operation at the moment, we hone in on the upper echelon of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by tracking their best picks, we have identified a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as integral, bullish insider trading activity is another way to parse down the financial markets. Obviously, there are a number of incentives for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).

Consequently, let’s take a look at the latest action encompassing EPR Properties (NYSE:EPR).

What does the smart money think about EPR Properties (NYSE:EPR)?

At year’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of -31% from the third quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Jeffrey Furber’s AEW Capital Management had the biggest position in EPR Properties (NYSE:EPR), worth close to $69 million, comprising 1.8% of its total 13F portfolio. Sitting at the No. 2 spot is Oaktree Capital Management, managed by Howard Marks, which held a $25 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Amy Minella’s Cardinal Capital, J. Alan Reid, Jr.’s Forward Management and Cliff Asness’s AQR Capital Management.

Due to the fact that EPR Properties (NYSE:EPR) has faced falling interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds who sold off their entire stakes last quarter. Interestingly, Jeffrey Furber’s AEW Capital Management said goodbye to the biggest position of the “upper crust” of funds we key on, comprising close to $66 million in stock.. Howard Marks’s fund, Oaktree Capital Management, also sold off its stock, about $27 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.

How are insiders trading EPR Properties (NYSE:EPR)?

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, EPR Properties (NYSE:EPR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to EPR Properties (NYSE:EPR). These stocks are Alexander’s, Inc. (NYSE:ALX), Tanger Factory Outlet Centers Inc. (NYSE:SKT), Northstar Realty Finance Corp. (NYSE:NRF), Washington Real Estate Investment Trust (NYSE:WRE), and Equity One, Inc. (NYSE:EQY). All of these stocks are in the reit – retail industry and their market caps resemble EPR’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Alexander’s, Inc. (NYSE:ALX) 4 0 0
Tanger Factory Outlet Centers Inc. (NYSE:SKT) 9 1 7
Northstar Realty Finance Corp. (NYSE:NRF) 19 0 0
Washington Real Estate Investment Trust (NYSE:WRE) 6 0 4
Equity One, Inc. (NYSE:EQY) 6 1 4

With the results demonstrated by our tactics, retail investors must always pay attention to hedge fund and insider trading activity, and EPR Properties (NYSE:EPR) is no exception.

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