Where Do Hedge Funds Stand On Mack Cali Realty Corp (CLI)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Mack Cali Realty Corp (NYSE:CLI) changed recently.

Mack Cali Realty Corp (NYSE:CLI) investors should be aware of a decrease in support from the world’s most elite money managers lately. Mack Cali Realty Corp (NYSE:CLI) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 21. Our calculations also showed that CLI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

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

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

James Mitarotonda Barington Capital

James A. Mitarotonda of Barington Capital Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we’re going to analyze the fresh hedge fund action surrounding Mack Cali Realty Corp (NYSE:CLI).

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

At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CLI over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Mack Cali Realty Corp (NYSE:CLI) was held by Renaissance Technologies, which reported holding $27.1 million worth of stock at the end of September. It was followed by Forward Management with a $3.2 million position. Other investors bullish on the company included Fisher Asset Management, Barington Capital Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Barington Capital Group allocated the biggest weight to Mack Cali Realty Corp (NYSE:CLI), around 4.74% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, earmarking 0.52 percent of its 13F equity portfolio to CLI.

Since Mack Cali Realty Corp (NYSE:CLI) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers who were dropping their positions entirely heading into Q4. At the top of the heap, David Harding’s Winton Capital Management sold off the biggest position of the 750 funds tracked by Insider Monkey, valued at about $0.8 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund said goodbye to about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mack Cali Realty Corp (NYSE:CLI) but similarly valued. We will take a look at Victory Capital Holdings, Inc. (NASDAQ:VCTR), Revolve Group, Inc. (NYSE:RVLV), First Bancorp (NYSE:FBP), CSW Industrials, Inc. (NASDAQ:CSWI), Urban Edge Properties (NYSE:UE), Banner Corporation (NASDAQ:BANR), and The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). This group of stocks’ market caps are closest to CLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VCTR 8 60210 -1
RVLV 21 78858 10
FBP 21 110879 -5
CSWI 16 29403 -3
UE 20 59441 -5
BANR 14 41696 0
NTB 15 56385 0
Average 16.4 62410 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $40 million in CLI’s case. Revolve Group, Inc. (NYSE:RVLV) is the most popular stock in this table. On the other hand Victory Capital Holdings, Inc. (NASDAQ:VCTR) is the least popular one with only 8 bullish hedge fund positions. Mack Cali Realty Corp (NYSE:CLI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLI is 30.3. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately CLI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CLI investors were disappointed as the stock returned 7.5% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.