Is WRE A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Washington Real Estate Investment Trust (NYSE:WRE) based on that data.

Is WRE a good stock to buy now? Washington Real Estate Investment Trust (NYSE:WRE) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 14. WRE has experienced an increase in support from the world’s most elite money managers of late. There were 8 hedge funds in our database with WRE holdings at the end of June. Our calculations also showed that WRE 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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 go over the new hedge fund action surrounding Washington Real Estate Investment Trust (NYSE:WRE).

Do Hedge Funds Think WRE Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 63% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WRE 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.

Is WRE A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Washington Real Estate Investment Trust (NYSE:WRE), which was worth $57.3 million at the end of the third quarter. On the second spot was Balyasny Asset Management which amassed $6 million worth of shares. Winton Capital Management, D E Shaw, and Millennium 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 Quantinno Capital allocated the biggest weight to Washington Real Estate Investment Trust (NYSE:WRE), around 0.33% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.07 percent of its 13F equity portfolio to WRE.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Washington Real Estate Investment Trust (NYSE:WRE). Balyasny Asset Management had $6 million invested in the company at the end of the quarter. Hoon Kim’s Quantinno Capital also made a $0.5 million investment in the stock during the quarter. The other funds with brand new WRE positions are Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Mika Toikka’s AlphaCrest Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Washington Real Estate Investment Trust (NYSE:WRE) but similarly valued. We will take a look at Revance Therapeutics Inc (NASDAQ:RVNC), Cavco Industries, Inc. (NASDAQ:CVCO), Progress Software Corporation (NASDAQ:PRGS), Prelude Therapeutics Incorporated (NASDAQ:PRLD), International Bancshares Corp (NASDAQ:IBOC), Walker & Dunlop Inc. (NYSE:WD), and Madison Square Garden Entertainment Corp. (NYSE:MSGE). This group of stocks’ market valuations are closest to WRE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RVNC 13 118943 -1
CVCO 22 160263 -1
PRGS 21 195226 -6
PRLD 15 839468 15
IBOC 19 77344 2
WD 17 72026 -1
MSGE 34 376412 -4
Average 20.1 262812 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $71 million in WRE’s case. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is the most popular stock in this table. On the other hand Revance Therapeutics Inc (NASDAQ:RVNC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Washington Real Estate Investment Trust (NYSE:WRE) is even less popular than RVNC. Our overall hedge fund sentiment score for WRE is 37.9. 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. Hedge funds clearly dropped the ball on WRE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on WRE as the stock returned 15.8% since Q3 (through December 8th) and outperformed the market by an even larger margin.

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