Vornado Realty Trust (VNO): Hedge Funds Taking Some Chips Off The Table

In this article we will take a look at whether hedge funds think Vornado Realty Trust (NYSE:VNO) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Vornado Realty Trust (NYSE:VNO) the right investment to pursue these days? The best stock pickers are reducing their bets on the stock. The number of bullish hedge fund positions were trimmed by 6 in recent months. Our calculations also showed that VNO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). VNO was in 25 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with VNO holdings at the end of the previous quarter.

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

If you’d ask most investors, hedge funds are seen as worthless, old financial tools of years past. While there are more than 8000 funds with their doors open today, Our experts look at the crème de la crème of this group, around 850 funds. It is estimated that this group of investors oversee the majority of the hedge fund industry’s total asset base, and by paying attention to their top equity investments, Insider Monkey has come up with a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Winters

David S. Winter of 40 North Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the key hedge fund action encompassing Vornado Realty Trust (NYSE:VNO).

Hedge fund activity in Vornado Realty Trust (NYSE:VNO)

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VNO over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Vornado Realty Trust (NYSE:VNO) was held by Long Pond Capital, which reported holding $100.4 million worth of stock at the end of September. It was followed by Third Avenue Management with a $37 million position. Other investors bullish on the company included 40 North Management, Levin Capital Strategies, and AQR Capital Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Vornado Realty Trust (NYSE:VNO), around 5.47% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, designating 5.14 percent of its 13F equity portfolio to VNO.

Because Vornado Realty Trust (NYSE:VNO) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds that decided to sell off their full holdings by the end of the first quarter. Interestingly, Paul Singer’s Elliott Management dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $114.4 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $39.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Vornado Realty Trust (NYSE:VNO). We will take a look at WABCO Holdings Inc. (NYSE:WBC), AngloGold Ashanti Limited (NYSE:AU), Luckin Coffee Inc. (NASDAQ:LK), and Fidelity National Financial Inc (NYSE:FNF). All of these stocks’ market caps are similar to VNO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WBC 32 1395171 -2
AU 19 399420 2
LK 36 1056167 3
FNF 43 386182 7
Average 32.5 809235 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $809 million. That figure was $224 million in VNO’s case. Fidelity National Financial Inc (NYSE:FNF) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 19 bullish hedge fund positions. Vornado Realty Trust (NYSE:VNO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately VNO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VNO investors were disappointed as the stock returned 18.9% during the second quarter 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 most of these stocks already outperformed the market in 2020.

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