Hedge Funds Have Never Been This Bullish On Healthcare Realty Trust Inc (HR)

Reymerlyn Martin

Fri, Jun 28, 2019, 7:15 PM

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Healthcare Realty Trust Inc (NYSE:HR) from the perspective of those elite funds.

Healthcare Realty Trust Inc (NYSE:HR) was in 14 hedge funds' portfolios at the end of March. HR has seen an increase in support from the world's most elite money managers lately. There were 9 hedge funds in our database with HR positions at the end of the previous quarter. Our calculations also showed that HR isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Let's take a gander at the fresh hedge fund action surrounding Healthcare Realty Trust Inc (NYSE:HR).

Hedge fund activity in Healthcare Realty Trust Inc (NYSE:HR)

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 56% from the fourth quarter of 2018. On the other hand, there were a total of 10 hedge funds with a bullish position in HR a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

The largest stake in Healthcare Realty Trust Inc (NYSE:HR) was held by Elliott Management, which reported holding $24.3 million worth of stock at the end of March. It was followed by Zimmer Partners with a $13.6 million position. Other investors bullish on the company included Carlson Capital, Sandler Capital Management, and Hudson Bay Capital Management.

As aggregate interest increased, specific money managers have been driving this bullishness. Zimmer Partners, managed by Stuart J. Zimmer, created the largest position in Healthcare Realty Trust Inc (NYSE:HR). Zimmer Partners had $13.6 million invested in the company at the end of the quarter. Andrew Sandler's Sandler Capital Management also made a $10.3 million investment in the stock during the quarter. The other funds with brand new HR positions are Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw, and Benjamin A. Smith's Laurion Capital Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Healthcare Realty Trust Inc (NYSE:HR) but similarly valued. These stocks are Hutchison China MediTech Limited (NASDAQ:HCM), Clean Harbors Inc (NYSE:CLH), MSA Safety Incorporated (NYSE:MSA), and Equity Commonwealth (NYSE:EQC). All of these stocks' market caps are closest to HR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HCM,6,8123,1 CLH,27,417279,4 MSA,17,103105,0 EQC,21,217004,4 Average,17.75,186378,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $80 million in HR's case. Clean Harbors Inc (NYSE:CLH) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 6 bullish hedge fund positions. Healthcare Realty Trust Inc (NYSE:HR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on HR, though not to the same extent, as the stock returned 4.3% during the same time frame and outperformed the market as well.

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

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