Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Healthpeak Properties, Inc. (NYSE:PEAK) in this article.
Is Healthpeak Properties, Inc. (NYSE:PEAK) going to take off soon? The smart money was cutting their exposure. The number of bullish hedge fund positions shrunk by 1 in recent months. Healthpeak Properties, Inc. (NYSE:PEAK) was in 22 hedge funds' portfolios at the end of September. The all time high for this statistic is 29. Our calculations also showed that PEAK 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). There were 23 hedge funds in our database with PEAK holdings at the end of June. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 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 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 stocks that are in our short portfolio.
Seth Klarman of Baupost 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. With all of this in mind let's view the new hedge fund action encompassing Healthpeak Properties, Inc. (NYSE:PEAK).
Do Hedge Funds Think PEAK Is A Good Stock To Buy Now?
At third quarter's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PEAK over the last 21 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Baupost Group held the most valuable stake in Healthpeak Properties, Inc. (NYSE:PEAK), which was worth $108.6 million at the end of the third quarter. On the second spot was Long Pond Capital which amassed $80.5 million worth of shares. D E Shaw, Citadel Investment Group, and Waterfront Capital Partners 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 Long Pond Capital allocated the biggest weight to Healthpeak Properties, Inc. (NYSE:PEAK), around 3.08% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, setting aside 2.78 percent of its 13F equity portfolio to PEAK.
Seeing as Healthpeak Properties, Inc. (NYSE:PEAK) has witnessed declining sentiment from the smart money, it's easy to see that there was a specific group of money managers that elected to cut their entire stakes in the third quarter. It's worth mentioning that Greg Poole's Echo Street Capital Management dumped the largest stake of the 750 funds followed by Insider Monkey, totaling an estimated $24.7 million in stock, and Jonathan Litt's Land & Buildings Investment Management was right behind this move, as the fund sold off about $17.8 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Healthpeak Properties, Inc. (NYSE:PEAK). These stocks are Energy Transfer L.P. (NYSE:ET), Li Auto Inc. (NASDAQ:LI), ArcelorMittal (NYSE:MT), Bilibili Inc. (NASDAQ:BILI), Masco Corporation (NYSE:MAS), Livongo Health, Inc. (NASDAQ:LVGO), and Pioneer Natural Resources Company (NYSE:PXD). All of these stocks' market caps match PEAK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ET,31,427313,0 LI,26,256910,26 MT,20,309854,1 BILI,37,1023597,8 MAS,46,878967,6 LVGO,56,1497348,20 PXD,42,269938,7 Average,36.9,666275,9.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $666 million. That figure was $291 million in PEAK's case. Livongo Health, Inc. (NASDAQ:LVGO) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 20 bullish hedge fund positions. Healthpeak Properties, Inc. (NYSE:PEAK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PEAK is 29.5. 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 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately PEAK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PEAK investors were disappointed as the stock returned 7.7% since the end of September (through 12/14) 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.
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