Although REITs haven’t done well in 2015 due to expectations that interest rates would be hiked at any moment throughout much of the year, they have outperformed the market historically. According to REIT.com, REITs have generated an average annual return of 11.13% over the last 20 years, soundly beating the S&P’s average annual return of 9.85% during the same time. With that in mind, let’s take a closer look at the leading REITs that the smart money tracked by Insider Monkey favors, which are Northstar Realty Finance Corp (NYSE:NRF), Crown Castle International Corp (NYSE:CCI), Vereit Inc (NYSE:VER), American Tower Corp (NYSE:AMT), and Equinix Inc (NASDAQ:EQIX).
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
#5 American Tower Corp (NYSE:AMT)
– Number of Hedge Fund Holders (as of September 30): 42
– Total Value of Hedge Fund Holdings (as of September 30): $2.35 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 6.30%
Although it still isn’t exactly a high yielder, especially when it comes to the average REIT, as its dividend yield currently stands at 1.96%, American Tower Corp (NYSE:AMT)’s quarterly dividend has grown for three straight years, rising from $0.29 per share in 2013 to $0.49 in the latest quarter. Driving the dividend growth has been strong global demand for wireless and communication infrastructure real estate, as the world becomes increasingly digital. Given the faster connection speeds and more data hogging apps on the way, demand for American Tower Corp’s real estate should continue to grow at a healthy rate over the next five years.
Follow American Tower Corp (NYSE:AMT)
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#4 Equinix Inc (NASDAQ:EQIX)
– Number of Hedge Fund Holders (as of September 30): 42
– Total Value of Hedge Fund Holdings (as of September 30): $3.24 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 20.80%
Hedge fund sentiment towards Equinix Inc (NASDAQ:EQIX) has stayed bullish, with 42 elite funds owning shares of the REIT at the end of the third quarter, up from 41 funds long the stock at the close of the second quarter. Seeing as one analyst has a ‘Strong Buy’ rating, seven have a ‘Buy’ rating, and seven have a ‘Hold’ rating, it’s not surprising that so many buy-side funds are long the data center REIT. Shares of the company are up by 36% year-to-date and analysts expect Equinix to grow its EPS by an average rate of 17% per year for the next five years.
