In this article we will analyze whether Armada Hoffler Properties Inc (NYSE:AHH) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Armada Hoffler Properties Inc (NYSE:AHH) worth your attention right now? The best stock pickers were betting on the stock. The number of long hedge fund positions inched up by 1 lately. Armada Hoffler Properties Inc (NYSE:AHH) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 15. Our calculations also showed that AHH isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Noam Gottesman of GLG Partners
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. Now let’s analyze the recent hedge fund action surrounding Armada Hoffler Properties Inc (NYSE:AHH).
Do Hedge Funds Think AHH Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AHH over the last 24 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Armada Hoffler Properties Inc (NYSE:AHH), which was worth $27.8 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $16.9 million worth of shares. AQR Capital Management, Citadel Investment Group, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position LDR Capital allocated the biggest weight to Armada Hoffler Properties Inc (NYSE:AHH), around 0.24% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to AHH.
As industrywide interest jumped, key hedge funds have jumped into Armada Hoffler Properties Inc (NYSE:AHH) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most outsized position in Armada Hoffler Properties Inc (NYSE:AHH). Tudor Investment Corp had $0.4 million invested in the company at the end of the quarter. Lawrence Raiman’s LDR Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Noam Gottesman’s GLG Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Armada Hoffler Properties Inc (NYSE:AHH) but similarly valued. We will take a look at Stoneridge, Inc. (NYSE:SRI), Sesen Bio, Inc. (NASDAQ:SESN), Pzena Investment Management Inc (NYSE:PZN), Vital Farms, Inc. (NASDAQ:VITL), Unitil Corporation (NYSE:UTL), Magic Software Enterprises Ltd. (NASDAQ:MGIC), and Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL). This group of stocks’ market values are similar to AHH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRI | 11 | 62517 | 1 |
| SESN | 10 | 46837 | -1 |
| PZN | 6 | 13246 | -1 |
| VITL | 10 | 18317 | 1 |
| UTL | 4 | 36771 | -3 |
| MGIC | 5 | 18791 | 0 |
| AOSL | 14 | 84552 | 1 |
| Average | 8.6 | 40147 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $51 million in AHH’s case. Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) is the most popular stock in this table. On the other hand Unitil Corporation (NYSE:UTL) is the least popular one with only 4 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. Our overall hedge fund sentiment score for AHH is 56. 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. 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 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately AHH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AHH were disappointed as the stock returned 1.8% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
