Hedge Funds Are Dumping Extra Space Storage, Inc. (EXR)

·6 min read

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Extra Space Storage, Inc. (NYSE:EXR) makes for a good investment right now.

Extra Space Storage, Inc. (NYSE:EXR) was in 21 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. EXR investors should be aware of a decrease in hedge fund sentiment in recent months. There were 28 hedge funds in our database with EXR holdings at the end of March. Our calculations also showed that EXR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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Ken Heebner of Capital Growth Management

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

Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EXR over the last 24 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is EXR A Good Stock To Buy?
Is EXR A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Extra Space Storage, Inc. (NYSE:EXR). Citadel Investment Group has a $46.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Noam Gottesman of GLG Partners, with a $39.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Ken Heebner's Capital Growth Management, Phill Gross and Robert Atchinson's Adage Capital Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Extra Space Storage, Inc. (NYSE:EXR), around 2.66% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, setting aside 2.21 percent of its 13F equity portfolio to EXR.

Due to the fact that Extra Space Storage, Inc. (NYSE:EXR) has faced declining sentiment from the smart money, it's safe to say that there was a specific group of funds who sold off their full holdings in the second quarter. It's worth mentioning that Stuart J. Zimmer's Zimmer Partners said goodbye to the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $29.2 million in stock, and Mark Coe's Intrinsic Edge Capital was right behind this move, as the fund cut about $5.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds in the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Extra Space Storage, Inc. (NYSE:EXR) but similarly valued. These stocks are Kellogg Company (NYSE:K), Paycom Software Inc (NYSE:PAYC), Western Digital Corporation (NASDAQ:WDC), Royal Caribbean Cruises Ltd. (NYSE:RCL), Dover Corporation (NYSE:DOV), Caesars Entertainment Inc. (NASDAQ:CZR), and Xylem Inc (NYSE:XYL). This group of stocks' market valuations match EXR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position K,32,482871,0 PAYC,39,1149714,-7 WDC,57,2114351,-1 RCL,42,596573,0 DOV,29,700034,3 CZR,73,1839888,-3 XYL,23,931677,0 Average,42.1,1116444,-1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.1 hedge funds with bullish positions and the average amount invested in these stocks was $1116 million. That figure was $176 million in EXR's case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Extra Space Storage, Inc. (NYSE:EXR) is even less popular than XYL. Our overall hedge fund sentiment score for EXR is 19. 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. Hedge funds clearly dropped the ball on EXR as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 EXR as the stock returned 14.3% since Q2 (through October 22nd) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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