While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Stag Industrial Inc (NYSE:STAG).
Is STAG a good stock to buy now? Stag Industrial Inc (NYSE:STAG) shareholders have witnessed an increase in hedge fund interest recently. Stag Industrial Inc (NYSE:STAG) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 24. There were 14 hedge funds in our database with STAG positions at the end of the second quarter. Our calculations also showed that STAG 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.
To most traders, hedge funds are assumed to be worthless, old investment tools of years past. While there are greater than 8000 funds trading at present, We look at the masters of this club, around 850 funds. These investment experts command the majority of all hedge funds’ total asset base, and by watching their matchless investments, Insider Monkey has deciphered various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 we’re going to review the key hedge fund action regarding Stag Industrial Inc (NYSE:STAG).
Do Hedge Funds Think STAG Is A Good Stock To Buy Now?
At the end of September, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in STAG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Waterfront Capital Partners held the most valuable stake in Stag Industrial Inc (NYSE:STAG), which was worth $19 million at the end of the third quarter. On the second spot was Capital Growth Management which amassed $10.4 million worth of shares. Motley Fool Asset Management, Gillson Capital, and Forward Management 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 Hill Winds Capital allocated the biggest weight to Stag Industrial Inc (NYSE:STAG), around 4.37% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, dishing out 3.05 percent of its 13F equity portfolio to STAG.
As aggregate interest increased, some big names were leading the bulls’ herd. Capital Growth Management, managed by Ken Heebner, established the biggest position in Stag Industrial Inc (NYSE:STAG). Capital Growth Management had $10.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $5.3 million position during the quarter. The following funds were also among the new STAG investors: Israel Englander’s Millennium Management, David Harding’s Winton Capital Management, and Parvinder Thiara’s Athanor Capital.
Let’s go over hedge fund activity in other stocks similar to Stag Industrial Inc (NYSE:STAG). We will take a look at Hutchison China MediTech Limited (NASDAQ:HCM), DXC Technology Company (NYSE:DXC), Alaska Air Group, Inc. (NYSE:ALK), Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), Appian Corporation (NASDAQ:APPN), Freshpet Inc (NASDAQ:FRPT), and MDU Resources Group Inc (NYSE:MDU). This group of stocks’ market caps are closest to STAG’s market cap.
|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 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $78 million in STAG’s case. DXC Technology Company (NYSE:DXC) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 5 bullish hedge fund positions. Stag Industrial Inc (NYSE:STAG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STAG is 55.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 15.8 percentage points. Unfortunately STAG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); STAG investors were disappointed as the stock returned 0.4% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.