J. Alan Reid’s Forward Management reduced its stake in AmREIT Inc (NYSE:AMRE) by 55,200 shares on Friday. According to the 13G filing , the investment firm now holds more than 968,300 Class B Common Shares, representing 4.92% of the company’s outstanding stock. Despite reducing its position in the real estate investment trust by around 5.4%, there is reason to believe Forward Management remains bullish regardings its future performance. This certainly would not be surprising, considering the overall solid performance of the REIT sector in 2014, which generated total returns of 32.3%, and the large position held by the fund in the company.
The San Francisco-based multi-strategy fund Forward Management was founded in 1998 by Jerome Alan Reid, providing its services to individuals, banking institutions, investment companies, and numerous pooled investment vehicles. The firm has a global focus, investing primarily in growth and value stocks of small and mid cap companies, which it seeks out through fundamental and quantitative analysis. Around 80% of the fund’s investments are made in the financial sector, leaving its $1.67 billion equity portfolio exposed to certain risks. Nevertheless, its top 10 holdings, which include SPDR S&P 500 ETF Trust (NYSEARCA:SPY) as the largest position at the end of last September, have a turnover rate of 44%. Apart from the firm’s ETF holdings, Forward Management’s most important holdings are Chatham Lodging Trust (NYSE:CLDT), Stag Industrial Inc (NYSE:STAG), and Franklin Street Properties Corp (NYSEMKT:FSP). Furthermore, it is currently AmREIT Inc (NYSE:AMRE)’s largest shareholder amond institutional investor, after mutual fund Vanguard Group reduced its position in the company significantly in October of 2014.
AmREIT Inc (NYSE:AMRE) is a $522 million market cap property management company headquartered in Houston, Texas. In addition to operating as a real estate investment trust (REIT) in the United States, the firm provides development, acquisitions, brokerage, leasing, construction, general contracting, asset, and property management services. AmREIT’s portfolio primarily consists of premier retail properties located on intersections in highly populated areas with high levels of traffic. Like many other REITs, the company managed to outperform the S&P 500 in 2014, achieving total returns of 64.3%. According to a report put forward by business information firm SNL Financial, AmREIT was able to snag a a spot as the the second most profitable REIT, behind the slightly better-performing Winthrop Realty Trust (NYSE:FUR). Hence, Forward Management’s large stake in the company surely paid off last year and could continue to do so throughout 2015, especially if the US economy continues its ascendent trajectory and interest rates remain low. Analysts are convinced this trend will persist, thus allowing REITs to generate healthy returns for their shareholders.
Despite reducing its exposure to AmREIT Inc (NYSE:AMRE), one can hardly suggest J. Alan Reid’s Forward Management has become bearish regarding the stock. As a matter of fact, the investment firm seems quite bullish in terms of the company’s future performance, as it continues to be its largest institutional shareholder. Other funds are also displaying an optimistic stance towards AmREIT, such as David Kowitz and Sheldon Kasowitz’s Indus Capital. The hedge fund holds a stake of 490,000 shares in the company, amounting to 1.1% of its equity portfolio. Nancy Havens-Hasty’s Havens Advisors has also displayed confidence in the real estate investment trust, entering a new position in AmREIT with 285,000 shares last quarter, which accounts for a whooping 3.6% of the hedge fund’s portfolio. Other significant institutional shareholders include Gregory Bylinsky and Jefferson Gramm’s Bandera Partners, with 229,400 shares, and Douglas Hirsch’s Seneca Capital, with a stake of 235,100 shares.
If you would like to know more about Forward Management’s investment strategy and what small investors can expect from the mutual fund industry, be sure to check out the following interview CNBC conducted with Alan Reid.
Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.
