Seritage Growth Properties (SRG): Is Shrinking Smart Money Ownership Cause for Concern?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Seritage Growth Properties (NYSE:SRG).

Seritage Growth Properties (NYSE:SRG) investors should be aware of a decrease in hedge fund interest of late, being held in 1 fewer hedge fund portfolio at the end of Q3 than a quarter earlier. 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 Home Bancshares Inc (NASDAQ:HOMB), Vector Group Ltd (NYSE:VGR), and Fresh Del Monte Produce Inc (NYSE:FDP) to gather more data points.

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How have hedgies been trading Seritage Growth Properties (NYSE:SRG)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a dip of 5% from the second quarter of 2016, sinking to its lowest point in the last year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Fairholme (FAIRX), managed by Bruce Berkowitz, holds the number one position in Seritage Growth Properties (NYSE:SRG). Fairholme (FAIRX) has a $174 million position in the stock, comprising 13.9% of its 13F portfolio. The second most bullish fund manager is Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, which holds a $68.3 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Mohnish Pabrai’s Mohnish Pabrai, Bruce Salomon’s Elberon Capital and Edward Lampert’s ESL Investments.

Because Seritage Growth Properties (NYSE:SRG) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers who sold off their positions entirely heading into Q4. It’s worth mentioning that Matthew Knauer and Mina Faltas’ Nokota Management sold off the largest stake of all the hedgies monitored by Insider Monkey, comprising close to $8.2 million in stock. Gordy Holterman and Derek Dunn’s fund, Overland Advisors, also cut its stock, about $5.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 fund heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Seritage Growth Properties (NYSE:SRG) but similarly valued. These stocks are Home Bancshares Inc (NASDAQ:HOMB), Vector Group Ltd (NYSE:VGR), Fresh Del Monte Produce Inc (NYSE:FDP), and GameStop Corp. (NYSE:GME). This group of stocks’ market caps are similar to SRG’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $372 million in SRG’s case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Home Bancshares Inc (NASDAQ:HOMB) is the least popular one with only 9 bullish hedge fund positions. Seritage Growth Properties (NYSE:SRG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GME might be a better candidate to consider for a long position.

Disclosure: None