The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Invitation Homes Inc. (NYSE:INVH) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Invitation Homes Inc. (NYSE:INVH) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. INVH shareholders have witnessed an increase in enthusiasm from smart money in recent months. There were 28 hedge funds in our database with INVH holdings at the end of March. Our calculations also showed that INVH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Heebner of Capital Growth Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s analyze the new hedge fund action regarding Invitation Homes Inc. (NYSE:INVH).
Do Hedge Funds Think INVH Is A Good Stock To Buy Now?
At Q2’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in INVH a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Invitation Homes Inc. (NYSE:INVH) was held by D E Shaw, which reported holding $209.1 million worth of stock at the end of June. It was followed by Echo Street Capital Management with a $181 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Long Pond Capital. In terms of the portfolio weights assigned to each position V3 Capital allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 10.96% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, dishing out 4.1 percent of its 13F equity portfolio to INVH.
As industrywide interest jumped, key money managers were breaking ground themselves. Islet Management, managed by Joseph Samuels, established the most outsized position in Invitation Homes Inc. (NYSE:INVH). Islet Management had $37.1 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $25.7 million position during the quarter. The other funds with brand new INVH positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Anand Parekh’s Alyeska Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Invitation Homes Inc. (NYSE:INVH) but similarly valued. These stocks are Huntington Bancshares Incorporated (NASDAQ:HBAN), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), CarMax Inc (NYSE:KMX), TransUnion (NYSE:TRU), DraftKings Inc. (NASDAQ:DKNG), MGM Resorts International (NYSE:MGM), and Church & Dwight Co., Inc. (NYSE:CHD). This group of stocks’ market valuations resemble INVH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HBAN | 33 | 443477 | 6 |
| HZNP | 56 | 4325284 | 8 |
| KMX | 39 | 1619512 | -7 |
| TRU | 35 | 2609504 | -6 |
| DKNG | 26 | 927908 | -17 |
| MGM | 59 | 2889161 | 2 |
| CHD | 35 | 1383073 | 8 |
| Average | 40.4 | 2028274 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.4 hedge funds with bullish positions and the average amount invested in these stocks was $2028 million. That figure was $1132 million in INVH’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand DraftKings Inc. (NASDAQ:DKNG) is the least popular one with only 26 bullish hedge fund positions. Invitation Homes Inc. (NYSE:INVH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INVH is 50.6. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on INVH as the stock returned 8.2% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
