Baron Funds: “We Believe Invitation Homes (INVH) Shares are Cheap”

Baron Funds, an asset management company, released its “Baron Real Estate Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Fund (the “Fund”) declined 20.62% (Institutional Shares) in the second quarter of 2022, underperforming its primary benchmark, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), which declined 17.12%. The Fund underperformed the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

In its Q2 2022 investor letter, Baron Real Estate Fund mentioned Invitation Homes Inc. (NYSE:INVH) and explained its insights for the company. Founded in 2012, Invitation Homes Inc. (NYSE:INVH) is a Dallas, Texas-based home leasing company with a $24.1 billion market capitalization. Invitation Homes Inc. (NYSE:INVH) delivered a -15.73% return since the beginning of the year, while its 12-month returns are down by -5.42%. The stock closed at $38.21 per share on September 14, 2022.

Here is what Baron Real Estate Fund has to say about Invitation Homes Inc. (NYSE:INVH) in its Q2 2022 investor letter:

“Invitation Homes, Inc. is the largest single-family home rental REIT in the U.S. Despite expectations for continued strong business results, the company’s shares declined approximately 22% in the first six months of 2022. We believe Invitation Homes shares are cheap. The company is currently valued at an implied capitalization rate basis of 5.2% versus private market transactions in the 4% capitalization range. The public market implied valuation of its owned homes is only $350,000 per home versus acquisition costs of more than $400,000.”

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Our calculations show that Invitation Homes Inc. (NYSE:INVH) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Invitation Homes Inc. (NYSE:INVH) was in 27 hedge fund portfolios at the end of the second quarter of 2022, compared to 33 funds in the previous quarter. Invitation Homes Inc. (NYSE:INVH) delivered a 11.59% return in the past 3 months.

In May 2021, we also shared another hedge fund’s views on Invitation Homes Inc. (NYSE:INVH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

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