Ramco-Gershenson Properties Trust (RPT): Are Hedge Funds Right To Dislike This Stock?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Ramco-Gershenson Properties Trust (NYSE:RPT).

Ramco-Gershenson Properties Trust (NYSE:RPT) has seen an increase in support from the world’s most successful money managers in recent months. RPT was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. There were 8 hedge funds in our database with RPT positions at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dean Foods Co (NYSE:DF), Evolent Health Inc (NYSE:EVH), and Astoria Financial Corp (NYSE:AF) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Ramco-Gershenson Properties Trust (NYSE:RPT)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 25% increase from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards RPT over the last 5 quarters, which was decidedly pessimistic until the latest quarter. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, J. Alan Reid, Jr.’s Forward Management has the largest position in Ramco-Gershenson Properties Trust (NYSE:RPT), worth close to $16.9 million, accounting for 1.3% of its total 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $14 million position. Some other members of the smart money that hold long positions consist of Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Dmitry Balyasny’s Balyasny Asset Management. We should note that Forward Management is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Consequently, some big names have jumped into Ramco-Gershenson Properties Trust (NYSE:RPT) headfirst. Balyasny Asset Management assembled the most outsized position in Ramco-Gershenson Properties Trust (NYSE:RPT), having $6.7 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also initiated a $0.5 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ramco-Gershenson Properties Trust (NYSE:RPT) but similarly valued. These stocks are Dean Foods Co (NYSE:DF), Evolent Health Inc (NYSE:EVH), Astoria Financial Corp (NYSE:AF), and SAGE Therapeutics Inc (NASDAQ:SAGE). All of these stocks’ market caps are closest to RPT’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $63 million in RPT’s case. Dean Foods Co (NYSE:DF) is the most popular stock in this table. On the other hand Astoria Financial Corp (NYSE:AF) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Ramco-Gershenson Properties Trust (NYSE:RPT) is only as popular as AF. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.

Disclosure: None