istar Inc (STAR): Are Hedge Funds Right About This Stock?

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Is istar Inc (NYSE:STAR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

istar Inc (NYSE:STAR) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 23. STAR has seen an increase in support from the world’s most elite money managers in recent months. There were 18 hedge funds in our database with STAR holdings at the end of June. Our calculations also showed that STAR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).


Louis Bacon Moore of Moore Capital

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. With all of this in mind let’s review the key hedge fund action regarding istar Inc (NYSE:STAR).

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

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards STAR over the last 25 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is STAR A Good Stock To Buy?

More specifically, Nut Tree Capital was the largest shareholder of istar Inc (NYSE:STAR), with a stake worth $50.2 million reported as of the end of September. Trailing Nut Tree Capital was Millennium Management, which amassed a stake valued at $27.7 million. Jet Capital Investors, Ursa Fund Management, and Jet Capital Investors 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 Nut Tree Capital allocated the biggest weight to istar Inc (NYSE:STAR), around 10.66% of its 13F portfolio. Ursa Fund Management is also relatively very bullish on the stock, earmarking 3.94 percent of its 13F equity portfolio to STAR.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Jet Capital Investors, managed by Matthew Mark, initiated the biggest call position in istar Inc (NYSE:STAR). Jet Capital Investors had $14 million invested in the company at the end of the quarter. Andrew Hahn’s Ursa Fund Management also made a $11.1 million investment in the stock during the quarter. The following funds were also among the new STAR investors: Matthew Mark’s Jet Capital Investors, Louis Bacon’s Moore Global Investments, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as istar Inc (NYSE:STAR) but similarly valued. These stocks are Middlesex Water Company (NASDAQ:MSEX), EnPro Industries, Inc. (NYSE:NPO), Bottomline Technologies (NASDAQ:EPAY), Regenxbio Inc (NASDAQ:RGNX), Crestwood Equity Partners LP (NYSE:CEQP), Ltd. (NASDAQ:TBLA), and Eventbrite, Inc. (NYSE:EB). This group of stocks’ market caps are similar to STAR’s market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSEX,5,52027,-3 NPO,10,193850,-2 EPAY,22,235741,-2 RGNX,15,185354,0 CEQP,3,4405,-4 TBLA,18,63121,18 EB,17,306027,-8 Average,12.9,148646,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $141 million in STAR’s case. Bottomline Technologies (NASDAQ:EPAY) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 3 bullish hedge fund positions. istar Inc (NYSE:STAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STAR is 82.8. 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. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately STAR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STAR were disappointed as the stock returned 3.5% since the end of September (through 12/31) 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.