Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Simon Property Group, Inc (NYSE:SPG).
Is Simon Property Group, Inc (NYSE:SPG) ready to rally soon? Investors who are in the know are in an optimistic mood. The number of long hedge fund positions moved up by 3 lately. Our calculations also showed that SPG 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). SPG was in 29 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with SPG holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny cannabis play. 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. With all of this in mind we’re going to analyze the latest hedge fund action encompassing Simon Property Group, Inc (NYSE:SPG).
Hedge fund activity in Simon Property Group, Inc (NYSE:SPG)
Heading into the second quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in SPG a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Two Sigma Advisors held the most valuable stake in Simon Property Group, Inc (NYSE:SPG), which was worth $94.2 million at the end of the third quarter. On the second spot was Laurion Capital Management which amassed $72.4 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and AQR Capital Management 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 Kamunting Street Capital allocated the biggest weight to Simon Property Group, Inc (NYSE:SPG), around 7.37% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, dishing out 0.91 percent of its 13F equity portfolio to SPG.
As industrywide interest jumped, some big names were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, established the biggest position in Simon Property Group, Inc (NYSE:SPG). Laurion Capital Management had $72.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $56.4 million position during the quarter. The other funds with new positions in the stock are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Allan Teh’s Kamunting Street Capital, and Joel Greenblatt’s Gotham Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Simon Property Group, Inc (NYSE:SPG) but similarly valued. These stocks are CMS Energy Corporation (NYSE:CMS), Parker-Hannifin Corporation (NYSE:PH), DocuSign, Inc. (NASDAQ:DOCU), and Mettler-Toledo International Inc. (NYSE:MTD). This group of stocks’ market caps resemble SPG’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMS,28,421101,-2 PH,32,889095,-7 DOCU,47,1082768,14 MTD,31,616788,2 Average,34.5,752438,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $752 million. That figure was $419 million in SPG’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 28 bullish hedge fund positions. Simon Property Group, Inc (NYSE:SPG) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately SPG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SPG investors were disappointed as the stock returned 5.2% 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.
Disclosure: None. This article was originally published at Insider Monkey.