Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Armada Hoffler Properties Inc (NYSE:AHH) and see how the stock is affected by the recent hedge fund activity.
Armada Hoffler Properties Inc (NYSE:AHH) investors should be aware of an increase in hedge fund sentiment lately. Our calculations also showed that AHH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are several methods stock traders have at their disposal to value stocks. Some of the less utilized methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outperform the market by a healthy amount (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the fresh hedge fund action regarding Armada Hoffler Properties Inc (NYSE:AHH).
Hedge fund activity in Armada Hoffler Properties Inc (NYSE:AHH)
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 56% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AHH over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in Armada Hoffler Properties Inc (NYSE:AHH). Renaissance Technologies has a $67.6 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $7.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Armada Hoffler Properties Inc (NYSE:AHH), around 0.11% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to AHH.
As aggregate interest increased, key money managers have jumped into Armada Hoffler Properties Inc (NYSE:AHH) headfirst. Marshall Wace, managed by Paul Marshall and Ian Wace, created the biggest position in Armada Hoffler Properties Inc (NYSE:AHH). Marshall Wace had $0.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new AHH investors: David E. Shaw’s D E Shaw, Bruce Kovner’s Caxton Associates, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks similar to Armada Hoffler Properties Inc (NYSE:AHH). We will take a look at Knoll Inc (NYSE:KNL), Waddell & Reed Financial, Inc. (NYSE:WDR), Nexa Resources S.A. (NYSE:NEXA), and National HealthCare Corporation (NYSEAMEX:NHC). All of these stocks’ market caps are closest to AHH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KNL | 15 | 59319 | -1 |
| WDR | 18 | 124549 | 0 |
| NEXA | 6 | 6943 | -3 |
| NHC | 7 | 63580 | -2 |
| Average | 11.5 | 63598 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $92 million in AHH’s case. Waddell & Reed Financial, Inc. (NYSE:WDR) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 6 bullish hedge fund positions. Armada Hoffler Properties Inc (NYSE:AHH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AHH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AHH were disappointed as the stock returned -0.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
