Here is What Hedge Funds Think About AvalonBay Communities Inc (AVB)

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 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider AvalonBay Communities Inc (NYSE:AVB) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is AvalonBay Communities Inc (NYSE:AVB) undervalued? Hedge funds were betting on the stock. The number of bullish hedge fund bets increased by 2 in recent months. AvalonBay Communities Inc (NYSE:AVB) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that AVB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s analyze the new hedge fund action regarding AvalonBay Communities Inc (NYSE:AVB).

Stuart Zimmer of Zimmer Partners

Do Hedge Funds Think AVB Is A Good Stock To Buy Now?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2021. By comparison, 29 hedge funds held shares or bullish call options in AVB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of AvalonBay Communities Inc (NYSE:AVB), with a stake worth $79.5 million reported as of the end of September. Trailing Citadel Investment Group was D E Shaw, which amassed a stake valued at $42.8 million. Balyasny Asset Management, Citadel Investment Group, and AQR Capital Management 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 Hill Winds Capital allocated the biggest weight to AvalonBay Communities Inc (NYSE:AVB), around 5.74% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, dishing out 5.01 percent of its 13F equity portfolio to AVB.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in AvalonBay Communities Inc (NYSE:AVB). Citadel Investment Group had $79.5 million invested in the company at the end of the quarter. Matthew Crandall Gilman’s Hill Winds Capital also made a $12.2 million investment in the stock during the quarter. The other funds with brand new AVB positions are Stuart J. Zimmer’s Zimmer Partners, Noam Gottesman’s GLG Partners, and Stephen Mykijewycz’s Masterton Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AvalonBay Communities Inc (NYSE:AVB) but similarly valued. We will take a look at Corteva, Inc. (NYSE:CTVA), Seagen Inc. (NASDAQ:SGEN), Equifax Inc. (NYSE:EFX), McKesson Corporation (NYSE:MCK), Public Service Enterprise Group Incorporated (NYSE:PEG), Suncor Energy Inc. (NYSE:SU), and Arthur J. Gallagher & Co. (NYSE:AJG). All of these stocks’ market caps are closest to AVB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $2752 million. That figure was $377 million in AVB’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 26 bullish hedge fund positions. AvalonBay Communities Inc (NYSE:AVB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVB is 32. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on AVB as the stock returned 10.2% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.