With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Essex Property Trust Inc (NYSE:ESS).
Is Essex Property Trust Inc (NYSE:ESS) a buy right now? Hedge funds were turning less bullish. The number of bullish hedge fund bets were cut by 9 in recent months. Essex Property Trust Inc (NYSE:ESS) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that ESS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
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Do Hedge Funds Think ESS Is A Good Stock To Buy Now?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ESS over the last 24 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the largest position in Essex Property Trust Inc (NYSE:ESS), worth close to $79.8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Eduardo Abush of Waterfront Capital Partners, with a $58 million position; 4.4% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Greg Poole's Echo Street Capital Management, Ken Heebner's Capital Growth Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Essex Property Trust Inc (NYSE:ESS), around 4.36% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, earmarking 2.55 percent of its 13F equity portfolio to ESS.
Because Essex Property Trust Inc (NYSE:ESS) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few money managers that decided to sell off their full holdings in the second quarter. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors sold off the largest stake of the 750 funds monitored by Insider Monkey, totaling about $29 million in stock, and Stephen Mykijewycz's Masterton Capital Management was right behind this move, as the fund cut about $7.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 9 funds in the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Essex Property Trust Inc (NYSE:ESS) but similarly valued. We will take a look at Teledyne Technologies Incorporated (NYSE:TDY), ORIX Corporation (NYSE:IX), Sun Communities Inc (NYSE:SUI), Plug Power, Inc. (NASDAQ:PLUG), Regions Financial Corporation (NYSE:RF), Cenovus Energy Inc (NYSE:CVE), and GrubHub Inc (NYSE:GRUB). This group of stocks' market caps are similar to ESS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TDY,36,1440654,5 IX,4,4271,-1 SUI,30,821616,-5 PLUG,34,878412,9 RF,33,242962,1 CVE,32,562772,9 GRUB,24,609889,-11 Average,27.6,651511,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $652 million. That figure was $281 million in ESS's case. Teledyne Technologies Incorporated (NYSE:TDY) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Essex Property Trust Inc (NYSE:ESS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ESS is 41.7. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ESS as the stock returned 12.5% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.