Where Do Hedge Funds Stand On Highwoods Properties Inc (HIW)?

We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Highwoods Properties Inc (NYSE:HIW) based on that data.

Highwoods Properties Inc (NYSE:HIW) has experienced a decrease in hedge fund sentiment in recent months. Highwoods Properties Inc (NYSE:HIW) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that HIW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Clint Carlson of Carlson Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we’re going to view the new hedge fund action surrounding Highwoods Properties Inc (NYSE:HIW).

Do Hedge Funds Think HIW Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in HIW over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

More specifically, Waterfront Capital Partners was the largest shareholder of Highwoods Properties Inc (NYSE:HIW), with a stake worth $37.9 million reported as of the end of March. Trailing Waterfront Capital Partners was Citadel Investment Group, which amassed a stake valued at $15.7 million. AQR Capital Management, Renaissance Technologies, and Carlson Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Highwoods Properties Inc (NYSE:HIW), around 3.43% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, dishing out 2.35 percent of its 13F equity portfolio to HIW.

Since Highwoods Properties Inc (NYSE:HIW) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings heading into Q2. Intriguingly, Israel Englander’s Millennium Management sold off the largest investment of the 750 funds followed by Insider Monkey, comprising about $28.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $10.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q2.

Let’s check out hedge fund activity in other stocks similar to Highwoods Properties Inc (NYSE:HIW). We will take a look at Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX), PacWest Bancorp (NASDAQ:PACW), Radian Group Inc (NYSE:RDN), ACI Worldwide Inc (NASDAQ:ACIW), VIZIO Holding Corp. (NYSE:VZIO), UMB Financial Corporation (NASDAQ:UMBF), and Sterling Bancorp (NYSE:STL). This group of stocks’ market values are similar to HIW’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OCDX 23 328347 23
PACW 31 599517 1
RDN 30 436078 -7
ACIW 23 686814 -7
VZIO 19 126361 19
UMBF 13 106723 -7
STL 20 343567 1
Average 22.7 375344 3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $375 million. That figure was $117 million in HIW’s case. PacWest Bancorp (NASDAQ:PACW) is the most popular stock in this table. On the other hand UMB Financial Corporation (NASDAQ:UMBF) is the least popular one with only 13 bullish hedge fund positions. Highwoods Properties Inc (NYSE:HIW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HIW is 43.4. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on HIW, though not to the same extent, as the stock returned 10.7% since the end of Q1 (through July 16th) and outperformed the market.

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