It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Regency Centers Corp (NASDAQ:REG) during the quarter below.
Is Regency Centers Corp (NASDAQ:REG) a buy, sell, or hold? Hedge funds are turning less bullish. The number of bullish hedge fund bets dropped by 3 lately. Our calculations also showed that REG isn’t among the 30 most popular stocks among hedge funds.
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 32 percentage points since May 2014 through March 12, 2019 (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.
Let’s take a look at the key hedge fund action encompassing Regency Centers Corp (NASDAQ:REG).
How are hedge funds trading Regency Centers Corp (NASDAQ:REG)?
At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in REG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Regency Centers Corp (NASDAQ:REG), with a stake worth $91.8 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $54.9 million. Balyasny Asset Management, Millennium Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Regency Centers Corp (NASDAQ:REG) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that elected to cut their full holdings last quarter. At the top of the heap, Clint Carlson’s Carlson Capital cut the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling close to $13.1 million in stock, and Eduardo Abush’s Waterfront Capital Partners was right behind this move, as the fund said goodbye to about $11.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Regency Centers Corp (NASDAQ:REG). These stocks are Campbell Soup Company (NYSE:CPB), National Oilwell Varco, Inc. (NYSE:NOV), PTC Inc (NASDAQ:PTC), and The Gap Inc. (NYSE:GPS). This group of stocks’ market caps are closest to REG’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $754 million. That figure was $301 million in REG’s case. PTC Inc (NASDAQ:PTC) is the most popular stock in this table. On the other hand The Gap Inc. (NYSE:GPS) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Regency Centers Corp (NASDAQ:REG) is even less popular than GPS. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately REG wasn’t in this group. Hedge funds that bet on REG were disappointed as the stock returned 11.3% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.