Is W.P. Carey Inc. (WPC) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards W.P. Carey Inc. (NYSE:WPC).

W.P. Carey Inc. (NYSE:WPC) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. WPC was in 14 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with WPC holdings at the end of the previous quarter. Our calculations also showed that WPC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

Mario Gabelli of GAMCO Investors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the fresh hedge fund action regarding W.P. Carey Inc. (NYSE:WPC).

What have hedge funds been doing with W.P. Carey Inc. (NYSE:WPC)?

Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in WPC 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, Citadel Investment Group held the most valuable stake in W.P. Carey Inc. (NYSE:WPC), which was worth $11.9 million at the end of the third quarter. On the second spot was Millennium Management which amassed $8.9 million worth of shares. Winton Capital Management, AQR Capital Management, and GAMCO Investors 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 Dorset Management allocated the biggest weight to W.P. Carey Inc. (NYSE:WPC), around 0.23% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to WPC.

Since W.P. Carey Inc. (NYSE:WPC) has experienced falling interest from hedge fund managers, logic holds that there is a sect of hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Jeffrey Hinkle’s Shoals Capital Management cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $8.1 million in stock, and Renaissance Technologies was right behind this move, as the fund sold off about $4.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to W.P. Carey Inc. (NYSE:WPC). We will take a look at Apollo Global Management, Inc. (NYSE:APO), TransUnion (NYSE:TRU), PagSeguro Digital Ltd. (NYSE:PAGS), and CenterPoint Energy, Inc. (NYSE:CNP). This group of stocks’ market values match WPC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APO 24 1733222 1
TRU 34 1040934 4
PAGS 35 1381252 5
CNP 27 1089888 -2
Average 30 1311324 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1311 million. That figure was $39 million in WPC’s case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand Apollo Global Management, Inc. (NYSE:APO) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks W.P. Carey Inc. (NYSE:WPC) is even less popular than APO. Hedge funds dodged a bullet by taking a bearish stance towards WPC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WPC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); WPC investors were disappointed as the stock returned -6.8% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

Disclosure: None. This article was originally published at Insider Monkey.