Is Spirit Realty Capital Inc (SRC) Going to Burn These Hedge Funds?

Spirit Realty Capital Inc (NYSE:SRC) was in 19 hedge funds’ portfolio at the end of March. SRC has seen an increase in hedge fund sentiment lately. There were 18 hedge funds in our database with SRC holdings at the end of the previous quarter.

Spirit Realty Capital Inc (NYSE:SRC)

At the moment, there are dozens of metrics market participants can use to analyze publicly traded companies. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can beat their index-focused peers by a superb amount (see just how much).

Just as key, positive insider trading activity is a second way to parse down the investments you’re interested in. Just as you’d expect, there are many stimuli for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the useful potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the recent action encompassing Spirit Realty Capital Inc (NYSE:SRC).

Hedge fund activity in Spirit Realty Capital Inc (NYSE:SRC)

In preparation for this quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of 6% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially.

According to our comprehensive database, TPG-AXON Management LP, managed by Dinakar Singh, holds the largest position in Spirit Realty Capital Inc (NYSE:SRC). TPG-AXON Management LP has a $124.8 million position in the stock, comprising 6.3% of its 13F portfolio. On TPG-AXON Management LP’s heels is Davidson Kempner, managed by Thomas Lenox Kempner, which held a $80.2 million position; the fund has 8.3% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Steven Tananbaum’s GoldenTree Asset Management, James Dondero’s Highland Capital Management and Anthony Bozza’s Lakewood Capital Management.

Consequently, key hedge funds were leading the bulls’ herd. Long Pond Capital, managed by John Khoury, established the most valuable position in Spirit Realty Capital Inc (NYSE:SRC). Long Pond Capital had 30.5 million invested in the company at the end of the quarter. John Thiessen’s Vertex One Asset Management also made a $3.8 million investment in the stock during the quarter. The other funds with brand new SRC positions are John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw, and Robert B. Gillam’s McKinley Capital Management.

What do corporate executives and insiders think about Spirit Realty Capital Inc (NYSE:SRC)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Spirit Realty Capital Inc (NYSE:SRC) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Spirit Realty Capital Inc (NYSE:SRC). These stocks are Capstead Mortgage Corporation (NYSE:CMO), PS Business Parks Inc (NYSE:PSB), Redwood Trust, Inc. (NYSE:RWT), Colony Financial Inc (NYSE:CLNY), and American Capital Mortgage Investment Crp (NASDAQ:MTGE). All of these stocks are in the reit – diversified industry and their market caps resemble SRC’s market cap.