Spirit MTA REIT (SMTA): Hedge Fund Sentiment Unchanged

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Spirit MTA REIT (NYSE:SMTA) based on that data.

Spirit MTA REIT (NYSE:SMTA) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of the third quarter of 2018. 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 CONSOL Coal Resources LP (NYSE:CCR), Five Prime Therapeutics Inc (NASDAQ:FPRX), and to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Jeremy Mindich - Scopia Capital

We’re going to take a look at the new hedge fund action regarding Spirit MTA REIT (NYSE:SMTA).

Hedge fund activity in Spirit MTA REIT (NYSE:SMTA)

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in SMTA over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


More specifically, Scopia Capital was the largest shareholder of Spirit MTA REIT (NYSE:SMTA), with a stake worth $27.8 million reported as of the end of September. Trailing Scopia Capital was Newtyn Management, which amassed a stake valued at $21.9 million. Rubric Capital Management, Indaba Capital Management, and Knighthead Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Spirit MTA REIT (NYSE:SMTA) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few money managers who sold off their positions entirely in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $0.3 million in stock. Frederick DiSanto’s fund, Ancora Advisors, also dumped its stock, about $0.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Spirit MTA REIT (NYSE:SMTA) but similarly valued. These stocks are CONSOL Coal Resources LP (NYSE:CCR), Five Prime Therapeutics Inc (NASDAQ:FPRX), Carter Bank & Trust (CARE), and Heritage-Crystal Clean, Inc. (NASDAQ:HCCI). This group of stocks’ market values match SMTA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCR 4 108937 1
FPRX 16 104728 -1
CARE 1 17292 0
HCCI 11 80963 3
Average 8 77980 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $162 million in SMTA’s case. Five Prime Therapeutics Inc (NASDAQ:FPRX) is the most popular stock in this table. On the other hand Carter Bank & Trust (CARE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Spirit MTA REIT (NYSE:SMTA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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