Simon Property Group, Inc (SPG) Fell Out Of Favor With Hedge Funds

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Simon Property Group, Inc (NYSE:SPG) and determine whether hedge funds skillfully traded this stock.

Is Simon Property Group, Inc (NYSE:SPG) going to take off soon? Money managers were reducing their bets on the stock. The number of bullish hedge fund bets dropped by 2 lately. Simon Property Group, Inc (NYSE:SPG) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistics is 31. Our calculations also showed that SPG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 29 hedge funds in our database with SPG positions at the end of the first quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the moguls of this club, around 850 funds. These investment experts preside over the majority of the hedge fund industry’s total asset base, and by paying attention to their finest picks, Insider Monkey has brought to light a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s check out the recent hedge fund action regarding Simon Property Group, Inc (NYSE:SPG).

What have hedge funds been doing with Simon Property Group, Inc (NYSE:SPG)?

At Q2’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in SPG over the last 20 quarters. So, let’s examine 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, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the biggest position in Simon Property Group, Inc (NYSE:SPG). Two Sigma Advisors has a $157.6 million position in the stock, comprising 0.5% of its 13F portfolio. On Two Sigma Advisors’s heels is Citadel Investment Group, led by Ken Griffin, holding a $67.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Ken Griffin’s Citadel Investment Group, Noam Gottesman’s GLG Partners and Jacob Mitchell’s Antipodes Partners. In terms of the portfolio weights assigned to each position Kamunting Street Capital allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 5.75% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, designating 2.64 percent of its 13F equity portfolio to SPG.

Because Simon Property Group, Inc (NYSE:SPG) has witnessed bearish sentiment from the smart money, it’s easy to see that there exists a select few funds that elected to cut their entire stakes in the second quarter. At the top of the heap, Renaissance Technologies said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $55.1 million in stock. David Harding’s fund, Winton Capital Management, also cut its stock, about $4.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds in the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Simon Property Group, Inc (NYSE:SPG) but similarly valued. We will take a look at Canon Inc. (NYSE:CAJ), Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), Fiat Chrysler Automobiles NV (NYSE:FCAU), DTE Energy Company (NYSE:DTE), New Oriental Education & Technology Group Inc. (NYSE:EDU), and Canadian Natural Resources Limited (NYSE:CNQ). All of these stocks’ market caps are closest to SPG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAJ 9 55132 2
EFX 28 1186553 -4
CERN 38 875303 -3
FCAU 20 365898 -5
DTE 24 384220 -5
EDU 39 1378683 -3
CNQ 28 556305 2
Average 26.6 686013 -2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $686 million. That figure was $532 million in SPG’s case. New Oriental Education & Technology Group Inc. (NYSE:EDU) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 9 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPG is 59.1. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately SPG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SPG were disappointed as the stock returned -5.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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