Brasada Capital Management, an investment management company, released its Q3 2024 investor letter. A copy of the letter can be downloaded here. The markets have performed well so far in 2024, and if past performance is any indication, the market is about to enter the seasonally stronger portion of the year. The firm is more concerned with the potential effects of the election on markets. The letter discussed its long-term investments in Real Estate Investment Trusts (REITs). In addition, you can check the fund’s top 5 holdings to know its best picks in 2024.
Brasada Capital Management highlighted stocks like Camden Property Trust (NYSE:CPT) in the Q3 2024 investor letter. Camden Property Trust (NYSE:CPT) is a real estate company engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities. The one-month return of Camden Property Trust (NYSE:CPT) was 4.00%, and its shares gained 30.78% of their value over the last 52 weeks. On December 4, 2024, Camden Property Trust (NYSE:CPT) stock closed at $122.14 per share with a market capitalization of $13.03 billion.
Brasada Capital Management stated the following regarding Camden Property Trust (NYSE:CPT) in its Q3 2024 investor letter:
Investment Highlight: Camden Property Trust (NYSE:CPT): In our Dividend Growth and Equity Income strategies, Real Estate Investment Trusts (REITs) are one of the sectors that we have a long history of investing in. REITs own some of the best real estate properties in the United States, their income streams are very predictable, and they possess some of the higher dividend yields in the market as they are required to pay out 90% of their taxable income.
For some historical context, 2021 was the second best year ever for the REIT sector and 2022 was the second worst year ever. Needless to say, it has been a bumpy ride. Aside from REITs that own office properties (which we have not owned for years), REIT fundamentals were fantastic in 2021. This combined with zero interest rates led to the strong REIT performance in 2021. In 2022, REIT fundamentals began to deteriorate, and interest rates rose rapidly which was especially bad for REITs which are rate sensitive for two reasons. First, they borrow a sizeable amount of money to acquire and develop properties. If interest rates move higher, it makes it more expensive to borrow and it lowers the return on investment for any potential developments or acquisitions. Second, valuations of the properties REITs own are worth less if interest rates are higher as the future cash flows must be discounted at a higher interest rate. Now that rates are finally coming down, we expect the sector to continue to recover much of its lost ground…” (Click here to read the full text)
A high-rise office building with the company’s logo prominently displayed in the center of the facade.
Camden Property Trust (NYSE:CPT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Camden Property Trust (NYSE:CPT) at the end of the third quarter which was 35 in the previous quarter. While we acknowledge the potential of Camden Property Trust (NYSE:CPT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Camden Property Trust (NYSE:CPT) and shared the list of best residential real estate stocks to buy. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.