Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Healthpeak Properties, Inc. (NYSE:PEAK)? The smart money sentiment can provide an answer to this question.
Is PEAK a good stock to buy? Healthpeak Properties, Inc. (NYSE:PEAK) investors should pay attention to a decrease in support from the world's most elite money managers lately. Healthpeak Properties, Inc. (NYSE:PEAK) was in 18 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. There were 22 hedge funds in our database with PEAK holdings at the end of December. Our calculations also showed that PEAK 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.
Larry Robbins of Glenview 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. Keeping this in mind we're going to go over the latest hedge fund action encompassing Healthpeak Properties, Inc. (NYSE:PEAK).
Do Hedge Funds Think PEAK Is A Good Stock To Buy Now?
At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PEAK over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Baupost Group was the largest shareholder of Healthpeak Properties, Inc. (NYSE:PEAK), with a stake worth $157.7 million reported as of the end of March. Trailing Baupost Group was Waterfront Capital Partners, which amassed a stake valued at $21.3 million. Adage Capital Management, D E Shaw, and Echo Street 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 Hill Winds Capital allocated the biggest weight to Healthpeak Properties, Inc. (NYSE:PEAK), around 5.56% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, earmarking 1.93 percent of its 13F equity portfolio to PEAK.
Due to the fact that Healthpeak Properties, Inc. (NYSE:PEAK) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of hedgies who sold off their entire stakes by the end of the first quarter. It's worth mentioning that Larry Robbins's Glenview Capital said goodbye to the largest position of all the hedgies watched by Insider Monkey, comprising an estimated $31.5 million in stock, and Paul Tudor Jones's Tudor Investment Corp was right behind this move, as the fund dropped about $4.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Healthpeak Properties, Inc. (NYSE:PEAK) but similarly valued. These stocks are Albemarle Corporation (NYSE:ALB), Rollins, Inc. (NYSE:ROL), Raymond James Financial, Inc. (NYSE:RJF), Ally Financial Inc (NYSE:ALLY), Viatris Inc. (NASDAQ:VTRS), Tradeweb Markets Inc. (NASDAQ:TW), and Qualtrics International Inc. (NASDAQ:XM). This group of stocks' market values match PEAK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALB,31,262992,10 ROL,30,643375,2 RJF,33,749300,-1 ALLY,51,2804131,-6 VTRS,58,1825444,-9 TW,26,311809,-5 XM,37,1247053,37 Average,38,1120586,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1121 million. That figure was $265 million in PEAK's case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand Tradeweb Markets Inc. (NASDAQ:TW) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Healthpeak Properties, Inc. (NYSE:PEAK) is even less popular than TW. Our overall hedge fund sentiment score for PEAK is 19.6. 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 28.5% in 2021 through July 23rd but managed to beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on PEAK, though not to the same extent, as the stock returned 15.3% since the end of March (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
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