Here’s Why Baron Funds Remain Bullish in Invitation Homes (INVH)

Baron Funds, an asset management company, released its “Baron Real Estate Income Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Income Fund (the “Fund”) declined 18.43% (Institutional Shares) in the second quarter of 2022, modestly underperforming its primary benchmark, the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Baron Real Estate Income Fund mentioned Invitation Homes Inc. (NYSE:INVH) and explained its insights for the company. Founded in 2012, Invitation Homes Inc. (NYSE:INVH) is a Dallas, Texas-based home leasing company with a $22.5 billion market capitalization. Invitation Homes Inc. (NYSE:INVH) delivered a -18.70% return since the beginning of the year, while its 12-month returns are down by -7.60%. The stock closed at $36.86 per share on September 16, 2022.

Here is what Baron Real Estate Income Fund has to say about Invitation Homes Inc. (NYSE:INVH) in its Q2 2022 investor letter:

“Single-Family Rental REITs (7.8%): We are bullish about the Fund’s investments in single-family rental REIT Invitation Homes, Inc. (NYSE:INVH). Demand conditions for rental homes are attractive due to a decline in home purchase affordability, the propensity to rent, and the strong desire by households to rent homes in suburbs rather than rent apartments in cities. Regarding new construction activity, there is a limited supply of single-family rental homes in the U.S. housing market, increasingly constrained by rising construction costs. Limited inventory combined with strong demand is leading to robust rent growth. Invitation Homes has an opportunity to partially offset inflation given that in-place annual leases are significantly below market rents. Valuations are compelling at less than $400,000 per home and at 5% capitalization rates.”

Photo by Breno Assis on Unsplash

Our calculations show that Invitation Homes Inc. (NYSE:INVH) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Invitation Homes Inc. (NYSE:INVH) was in 27 hedge fund portfolios at the end of the second quarter of 2022, compared to 33 funds in the previous quarter. Invitation Homes Inc. (NYSE:INVH) delivered a 9.18% return in the past 3 months.

In May 2021, we also shared another hedge fund’s views on Invitation Homes Inc. (NYSE:INVH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

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