In this article we will take a look at whether hedge funds think Franklin Street Properties Corp. (NYSE:FSP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is FSP a good stock to buy now? Franklin Street Properties Corp. (NYSE:FSP) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. FSP shareholders have witnessed an increase in hedge fund sentiment lately. There were 13 hedge funds in our database with FSP positions at the end of the second quarter. Our calculations also showed that FSP 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).
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let’s go over the new hedge fund action encompassing Franklin Street Properties Corp. (NYSE:FSP).
Do Hedge Funds Think FSP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in FSP over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Franklin Street Properties Corp. (NYSE:FSP) was held by Renaissance Technologies, which reported holding $10.9 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $4 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Franklin Street Properties Corp. (NYSE:FSP), around 0.19% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to FSP.
As aggregate interest increased, specific money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Franklin Street Properties Corp. (NYSE:FSP). Balyasny Asset Management had $0.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $0.1 million position during the quarter. The other funds with new positions in the stock are Roger Ibbotson’s Zebra Capital Management, Karim Abbadi and Edward McBride’s Centiva Capital, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Franklin Street Properties Corp. (NYSE:FSP) but similarly valued. These stocks are Designer Brands Inc. (NYSE:DBI), Eros STX Global Corporation (NYSE:ESGC), Bonanza Creek Energy Inc (NYSE:BCEI), Granite Point Mortgage Trust Inc. (NYSE:GPMT), Kimball International Inc (NASDAQ:KBAL), Golden Entertainment Inc (NASDAQ:GDEN), and Arrow Financial Corporation (NASDAQ:AROW). This group of stocks’ market valuations resemble FSP’s market valuation.
|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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $19 million in FSP’s case. Kimball International Inc (NASDAQ:KBAL) is the most popular stock in this table. On the other hand Arrow Financial Corporation (NASDAQ:AROW) is the least popular one with only 3 bullish hedge fund positions. Franklin Street Properties Corp. (NYSE:FSP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FSP is 72.6. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on FSP as the stock returned 34.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.