While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Public Storage (NYSE:PSA).
Public Storage (NYSE:PSA) was in 35 hedge funds' portfolios at the end of September. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PSA investors should pay attention to an increase in support from the world's most elite money managers lately. There were 27 hedge funds in our database with PSA positions at the end of the second quarter. Our calculations also showed that PSA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we're going to take a glance at the new hedge fund action regarding Public Storage (NYSE:PSA).
Do Hedge Funds Think PSA Is A Good Stock To Buy Now?
At third quarter's end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the second quarter of 2021. On the other hand, there were a total of 17 hedge funds with a bullish position in PSA a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Public Storage (NYSE:PSA), with a stake worth $215.2 million reported as of the end of September. Trailing AQR Capital Management was Elliott Investment Management, which amassed a stake valued at $170.8 million. Renaissance Technologies, Millennium Management, and GLG 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 Land & Buildings Investment Management allocated the biggest weight to Public Storage (NYSE:PSA), around 5.67% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, designating 2.31 percent of its 13F equity portfolio to PSA.
As one would reasonably expect, some big names were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in Public Storage (NYSE:PSA). Citadel Investment Group had $77.8 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $48.5 million investment in the stock during the quarter. The other funds with brand new PSA positions are John Khoury's Long Pond Capital, Israel Englander's Millennium Management, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks similar to Public Storage (NYSE:PSA). These stocks are NXP Semiconductors NV (NASDAQ:NXPI), Ferrari N.V. (NYSE:RACE), Itau Unibanco Holding SA (NYSE:ITUB), Takeda Pharmaceutical Company Limited (NYSE:TAK), Prudential Public Limited Company (NYSE:PUK), Chipotle Mexican Grill, Inc. (NYSE:CMG), and KLA Corporation (NASDAQ:KLAC). All of these stocks' market caps resemble PSA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXPI,51,1080819,-1 RACE,27,1177569,0 ITUB,16,379560,0 TAK,15,443627,-4 PUK,4,10147,0 CMG,39,3687748,4 KLAC,44,1844123,-1 Average,28,1231942,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1232 million. That figure was $1260 million in PSA's case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 4 bullish hedge fund positions. Public Storage (NYSE:PSA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PSA is 73. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on PSA as the stock returned 10.2% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.