Were Hedge Funds Right About Hudson Pacific Properties Inc (HPP)?
We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Hudson Pacific Properties Inc (NYSE:HPP) based on that data.
Is Hudson Pacific Properties Inc (NYSE:HPP) a bargain? The best stock pickers were taking a bearish view. The number of bullish hedge fund positions were trimmed by 6 in recent months. Hudson Pacific Properties Inc (NYSE:HPP) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that HPP isn't among the 30 most popular stocks among hedge funds (click for Q1 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 115 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.
Donald Sussman of Paloma Partners
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. Now we're going to view the key hedge fund action encompassing Hudson Pacific Properties Inc (NYSE:HPP).
Do Hedge Funds Think HPP Is A Good Stock To Buy Now?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HPP over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Blue Pool Capital held the most valuable stake in Hudson Pacific Properties Inc (NYSE:HPP), which was worth $20.4 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $19.1 million worth of shares. Angelo Gordon & Co, Gillson Capital, and Masterton 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 Masterton Capital Management allocated the biggest weight to Hudson Pacific Properties Inc (NYSE:HPP), around 6.61% of its 13F portfolio. Blue Pool Capital is also relatively very bullish on the stock, setting aside 4.58 percent of its 13F equity portfolio to HPP.
Since Hudson Pacific Properties Inc (NYSE:HPP) has faced bearish sentiment from hedge fund managers, it's safe to say that there is a sect of hedgies that elected to cut their entire stakes by the end of the first quarter. Interestingly, Daniel Sundheim's D1 Capital Partners cut the largest investment of all the hedgies followed by Insider Monkey, valued at about $68.9 million in stock, and David Fear's Thunderbird Partners was right behind this move, as the fund said goodbye to about $20.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hudson Pacific Properties Inc (NYSE:HPP) but similarly valued. These stocks are ONE Gas Inc (NYSE:OGS), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), JFrog Ltd. (NASDAQ:FROG), Covetrus, Inc. (NASDAQ:CVET), BankUnited Inc (NYSE:BKU), Ryder System, Inc. (NYSE:R), and F.N.B. Corp (NYSE:FNB). This group of stocks' market values are closest to HPP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OGS,13,28456,1 TKC,8,28943,4 FROG,20,235381,4 CVET,17,143072,-2 BKU,9,135009,-2 R,20,358550,3 FNB,16,55214,-3 Average,14.7,140661,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $105 million in HPP's case. JFrog Ltd. (NASDAQ:FROG) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 8 bullish hedge fund positions. Hudson Pacific Properties Inc (NYSE:HPP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HPP is 50.1. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 and beat the market again by 10.1 percentage points. Unfortunately HPP wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HPP were disappointed as the stock returned 2.2% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
