How do we determine whether AvalonBay Communities Inc (NYSE:AVB) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
AvalonBay Communities Inc (NYSE:AVB) has experienced an increase in hedge fund sentiment lately. AVB was in 24 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with AVB holdings at the end of the previous quarter. At the end of this article we will also compare AVB to other stocks, including SYSCO Corporation (NYSE:SYY), Health Care REIT, Inc. (NYSE:HCN), and Norfolk Southern Corp. (NYSE:NSC) to get a better sense of its popularity.
Follow Avalonbay Communities Inc (NYSE:AVB)
Follow Avalonbay Communities Inc (NYSE:AVB)
At the moment there are many gauges market participants can use to appraise publicly traded companies. Some of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can trounce their index-focused peers by a superb margin (see the details here).
Now, let’s check out the latest action encompassing AvalonBay Communities Inc (NYSE:AVB).
What have hedge funds been doing with AvalonBay Communities Inc (NYSE:AVB)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 9% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AEW Capital Management, run by Jeffrey Furber, holds the most valuable position in AvalonBay Communities Inc (NYSE:AVB). According to its latest quarterly report, the fund has a $264.6 million position in the stock, comprising 6.2% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $150.4 million position; 0.4% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions consist of Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management.
As industrywide interest jumped, specific money managers have been driving this bullishness. Echo Street Capital Management, managed by Greg Poole, established the biggest position in AvalonBay Communities Inc (NYSE:AVB). The fund reportedly had $7.2 million invested in the company at the end of the quarter. David S. Winter and David J. Millstone’s 40 North Management also initiated a $5 million position during the quarter. The following funds were also among the new AVB investors: George Soros’s Soros Fund Management, John Burbank’s Passport Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks similar to AvalonBay Communities Inc (NYSE:AVB). We will take a look at SYSCO Corporation (NYSE:SYY), Health Care REIT, Inc. (NYSE:HCN), Norfolk Southern Corp. (NYSE:NSC), and Perrigo Company (NASDAQ:PRGO). This group of stocks’ market caps resemble AVB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYY | 30 | 3454838 | 1 |
| HCN | 24 | 580835 | 1 |
| NSC | 33 | 495498 | 2 |
| PRGO | 63 | 4597917 | -20 |
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2.28 billion. That figure was a meager $635 million in AVB’s case. Perrigo Company (NASDAQ:PRGO) is the most popular stock in this table, while AvalonBay Communities Inc (NYSE:AVB) is on par with Health Care REIT, Inc. (NYSE:HCN) at the bottom of the table with only 24 bullish hedge fund positions. Taking it all into consideration, we believe PRGO might be a better candidate to consider a long position.
