Equities

Hedge Funds Are Selling Alexandria Real Estate Equities Inc (ARE)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Alexandria Real Estate Equities Inc (NYSE:ARE).

Alexandria Real Estate Equities Inc (NYSE:ARE) shareholders have witnessed a decrease in hedge fund sentiment of late. Alexandria Real Estate Equities Inc (NYSE:ARE) was in 26 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. There were 28 hedge funds in our database with ARE holdings at the end of June. Our calculations also showed that ARE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind let’s view the recent hedge fund action regarding Alexandria Real Estate Equities Inc (NYSE:ARE).

Chris Hohn's top 10 stock picks

Chris Hohn’s top 10 stock picks

Chris Hohn of TCI Fund Management

Do Hedge Funds Think ARE Is A Good Stock To Buy Now?

At third quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in ARE 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.

Among these funds, TCI Fund Management held the most valuable stake in Alexandria Real Estate Equities Inc (NYSE:ARE), which was worth $199.5 million at the end of the third quarter. On the second spot was Zimmer Partners which amassed $126.6 million worth of shares. Adage Capital Management, Long Pond Capital, and Echo Street 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 Alexandria Real Estate Equities Inc (NYSE:ARE), around 5.16% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, dishing out 3.04 percent of its 13F equity portfolio to ARE.

Because Alexandria Real Estate Equities Inc (NYSE:ARE) has faced bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedgies who were dropping their positions entirely in the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of the 750 funds watched by Insider Monkey, comprising about $67.8 million in stock. Chris Rokos’s fund, Rokos Capital Management, also said goodbye to its stock, about $18.2 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Alexandria Real Estate Equities Inc (NYSE:ARE). We will take a look at MPLX LP (NYSE:MPLX), Carnival Corporation & plc (NYSE:CCL), Nucor Corporation (NYSE:NUE), Valero Energy Corporation (NYSE:VLO), Orange SA (NYSE:ORAN), Tyson Foods, Inc. (NYSE:TSN), and AMETEK, Inc. (NYSE:AME). This group of stocks’ market valuations resemble ARE’s market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPLX,8,90948,-3 CCL,36,520667,5 NUE,25,199344,-7 VLO,32,289108,-6 ORAN,3,20523,0 TSN,33,865195,0 AME,38,1320239,0 Average,25,472289,-1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $472 million. That figure was $490 million in ARE’s case. AMETEK, Inc. (NYSE:AME) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Alexandria Real Estate Equities Inc (NYSE:ARE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARE is 62.8. 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. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on ARE as the stock returned 10.4% since the end of Q3 (through 12/9) 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.


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