Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Equity Lifestyle Properties, Inc. (NYSE:ELS).
Equity Lifestyle Properties, Inc. (NYSE:ELS) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Equity Lifestyle Properties, Inc. (NYSE:ELS) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. There were 29 hedge funds in our database with ELS holdings at the end of March. Our calculations also showed that ELS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Noam Gottesman of GLG Partners
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Do Hedge Funds Think ELS Is A Good Stock To Buy Now?
At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ELS over the last 24 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, John Khoury's Long Pond Capital has the largest position in Equity Lifestyle Properties, Inc. (NYSE:ELS), worth close to $101.2 million, corresponding to 3.5% of its total 13F portfolio. On Long Pond Capital's heels is GLG Partners, led by Noam Gottesman, holding a $62.4 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, Renaissance Technologies and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors. In terms of the portfolio weights assigned to each position Long Pond Capital allocated the biggest weight to Equity Lifestyle Properties, Inc. (NYSE:ELS), around 3.51% of its 13F portfolio. V3 Capital is also relatively very bullish on the stock, designating 2.82 percent of its 13F equity portfolio to ELS.
Due to the fact that Equity Lifestyle Properties, Inc. (NYSE:ELS) has faced falling interest from hedge fund managers, we can see that there is a sect of funds who sold off their full holdings heading into Q3. It's worth mentioning that Stuart J. Zimmer's Zimmer Partners cut the largest investment of the 750 funds followed by Insider Monkey, valued at about $30.2 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also said goodbye to its stock, about $29.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Equity Lifestyle Properties, Inc. (NYSE:ELS) but similarly valued. We will take a look at Advance Auto Parts, Inc. (NYSE:AAP), W.P. Carey Inc. (NYSE:WPC), Mohawk Industries, Inc. (NYSE:MHK), Elastic N.V. (NYSE:ESTC), Masimo Corporation (NASDAQ:MASI), CBOE Global Markets Inc (NASDAQ:CBOE), and Lennox International Inc. (NYSE:LII). This group of stocks' market values are closest to ELS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAP,34,849879,-9 WPC,29,147455,6 MHK,44,1311640,8 ESTC,55,3062021,3 MASI,28,317268,-7 CBOE,31,826143,-2 LII,26,465734,1 Average,35.3,997163,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $997 million. That figure was $478 million in ELS's case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Lennox International Inc. (NYSE:LII) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Equity Lifestyle Properties, Inc. (NYSE:ELS) is even less popular than LII. Our overall hedge fund sentiment score for ELS is 25.2. 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 ELS 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 ELS as the stock returned 16.4% 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.