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 at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of AvalonBay Communities Inc (NYSE:AVB).
AvalonBay Communities Inc (NYSE:AVB) was in 40 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. AVB investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 32 hedge funds in our database with AVB holdings at the end of December. Our calculations also showed that AVB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David E. Shaw of D.E. Shaw
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 battery 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. Now we’re going to take a gander at the key hedge fund action encompassing AvalonBay Communities Inc (NYSE:AVB).
Do Hedge Funds Think AVB Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in AVB a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in AvalonBay Communities Inc (NYSE:AVB) was held by Millennium Management, which reported holding $84.1 million worth of stock at the end of December. It was followed by Long Pond Capital with a $78.6 million position. Other investors bullish on the company included Angelo Gordon & Co, D E Shaw, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to AvalonBay Communities Inc (NYSE:AVB), around 6.9% of its 13F portfolio. Masterton Capital Management is also relatively very bullish on the stock, earmarking 5.64 percent of its 13F equity portfolio to AVB.
As industrywide interest jumped, key money managers have jumped into AvalonBay Communities Inc (NYSE:AVB) headfirst. Waterfront Capital Partners, managed by Eduardo Abush, assembled the most valuable position in AvalonBay Communities Inc (NYSE:AVB). Waterfront Capital Partners had $30.9 million invested in the company at the end of the quarter. Craig Peskin and Peter Fleiss’s Solel Partners also initiated a $27.7 million position during the quarter. The other funds with brand new AVB positions are Jonathan Litt’s Land & Buildings Investment Management, Renaissance Technologies, and Clint Carlson’s Carlson Capital.
Let’s now review hedge fund activity in other stocks similar to AvalonBay Communities Inc (NYSE:AVB). These stocks are Copart, Inc. (NASDAQ:CPRT), Consolidated Edison, Inc. (NYSE:ED), Datadog, Inc. (NASDAQ:DDOG), Credit Suisse Group AG (NYSE:CS), TELUS Corporation (NYSE:TU), Etsy Inc (NASDAQ:ETSY), and Garmin Ltd. (NASDAQ:GRMN). This group of stocks’ market valuations resemble AVB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPRT | 49 | 966765 | 3 |
| ED | 22 | 196630 | -10 |
| DDOG | 44 | 2383744 | -8 |
| CS | 13 | 35775 | 2 |
| TU | 18 | 200045 | 4 |
| ETSY | 53 | 1645009 | -3 |
| GRMN | 23 | 513329 | -4 |
| Average | 31.7 | 848757 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $631 million in AVB’s case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 13 bullish hedge fund positions. AvalonBay Communities Inc (NYSE:AVB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVB is 73.8. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on AVB as the stock returned 16% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Avalonbay Communities Inc (NYSE:AVB)
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Disclosure: None. This article was originally published at Insider Monkey.
