Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Armada Hoffler Properties Inc (NYSE:AHH) investors should pay attention to an increase in support from the world’s most elite money managers recently. AHH was in 11 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with AHH positions at the end of the previous quarter. Our calculations also showed that ahh isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a glance at the fresh hedge fund action regarding Armada Hoffler Properties Inc (NYSE:AHH).
What does smart money think about Armada Hoffler Properties Inc (NYSE:AHH)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in AHH over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Armada Hoffler Properties Inc (NYSE:AHH) was held by Renaissance Technologies, which reported holding $54.1 million worth of stock at the end of March. It was followed by AQR Capital Management with a $1.2 million position. Other investors bullish on the company included Springbok Capital, Two Sigma Advisors, and Winton Capital Management.
Consequently, key hedge funds were breaking ground themselves. Weld Capital Management, managed by Minhua Zhang, established the most outsized position in Armada Hoffler Properties Inc (NYSE:AHH). Weld Capital Management had $0.3 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.2 million position during the quarter.
Let’s also examine 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 Consolidated Communications Holdings Inc (NASDAQ:CNSL), Triumph Bancorp Inc (NASDAQ:TBK), Valhi, Inc. (NYSE:VHI), and Century Aluminum Co (NASDAQ:CENX). This group of stocks’ market valuations are closest to AHH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNSL | 11 | 13357 | -3 |
| TBK | 5 | 56315 | -1 |
| VHI | 6 | 5844 | -3 |
| CENX | 12 | 36782 | 1 |
| Average | 8.5 | 28075 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $60 million in AHH’s case. Century Aluminum Co (NASDAQ:CENX) is the most popular stock in this table. On the other hand Triumph Bancorp Inc (NASDAQ:TBK) is the least popular one with only 5 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 calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on AHH as the stock returned 10% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
