In this article we will analyze whether Rexford Industrial Realty Inc (NYSE:REXR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is REXR a good stock to buy now? Rexford Industrial Realty Inc (NYSE:REXR) shareholders have witnessed a decrease in hedge fund interest in recent months. Rexford Industrial Realty Inc (NYSE:REXR) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 24. There were 24 hedge funds in our database with REXR holdings at the end of June. Our calculations also showed that REXR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to take a look at the recent hedge fund action encompassing Rexford Industrial Realty Inc (NYSE:REXR).
Do Hedge Funds Think REXR Is A Good Stock To Buy Now?
At the end of September, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in REXR over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Rexford Industrial Realty Inc (NYSE:REXR) was held by Renaissance Technologies, which reported holding $14.5 million worth of stock at the end of September. It was followed by Millennium Management with a $10.8 million position. Other investors bullish on the company included Brasada Capital Management, Carlson Capital, and Winton Capital Management. In terms of the portfolio weights assigned to each position Brasada Capital Management allocated the biggest weight to Rexford Industrial Realty Inc (NYSE:REXR), around 1.91% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, dishing out 0.3 percent of its 13F equity portfolio to REXR.
Because Rexford Industrial Realty Inc (NYSE:REXR) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of funds who sold off their full holdings heading into Q4. Interestingly, Eduardo Abush's Waterfront Capital Partners sold off the largest investment of all the hedgies tracked by Insider Monkey, totaling close to $19.1 million in stock, and Robert Boucai's Newbrook Capital Advisors was right behind this move, as the fund sold off about $15.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 12 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Rexford Industrial Realty Inc (NYSE:REXR). We will take a look at TopBuild Corp (NYSE:BLD), BigCommerce Holdings, Inc. (NASDAQ:BIGC), TIM Participacoes SA (NYSE:TSU), Flex Ltd. (NASDAQ:FLEX), Santander Consumer USA Holdings Inc (NYSE:SC), AGCO Corporation (NYSE:AGCO), and Hill-Rom Holdings, Inc. (NYSE:HRC). This group of stocks' market caps are closest to REXR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLD,21,124114,-9 BIGC,18,357375,18 TSU,13,99011,-2 FLEX,27,874431,-7 SC,20,429499,0 AGCO,31,364569,10 HRC,34,538163,4 Average,23.4,398166,2 [/table]
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $47 million in REXR's case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand TIM Participacoes SA (NYSE:TSU) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Rexford Industrial Realty Inc (NYSE:REXR) is even less popular than TSU. Our overall hedge fund sentiment score for REXR is 8. 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 dodged a bullet by taking a bearish stance towards REXR. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately REXR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); REXR investors were disappointed as the stock returned 4% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
