Third Avenue Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Third Avenue Real Estate Value Fund posted a return of -28.83% for the quarter as compared to its benchmark, the FTSE EPRA NAREIT Developed Index which returned -28.34% (before fees) in the same quarter. You should check out Third Avenue Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Third Avenue Management highlighted a few stocks and Essex Property Trust Inc. (NYSE:ESS) is one of them. Essex Property Trust is a real estate investment trust company. Year-to-date, Essex Property Trust Inc. (NYSE:ESS) stock lost 15.3% and on June 15th it had a closing price of $244.64. Here is what Third Avenue Management said:
“Essex Property Trust (“Essex”) is a US-based REIT that owns a high-quality portfolio of 250 multifamily communities (with more than 60,000 units) that have been assembled over the better part of five decades and are primarily located in California and Washington. Based upon our experience, it is incredibly challenging to build new product in the company’s core markets (despite constant rhetoric of increasing supply), which makes existing assets like those owned by Essex perpetually underappreciated. While it seems that the company’s occupancy and rental rates will be pressured in the near-term, the company maintains a super-strong balance sheet with a net debt to asset ratio of 25%, a high fixed-charge coverage rate of 5.0 times, and more than $200 million of annual retained cash flow (after dividends). Therefore, Essex could very well have an opportunity to deploy capital in value-enhancing investments (as it has done in other market dislocations), and the company’s portfolio is likely to maintain its value over the long-term given the appeal of its sub-markets and the economic underpinnings of their greater metropolitan areas (e.g., San Francisco, Los Angeles, San Diego, et al).”
In Q1 2020, the number of bullish hedge fund positions on Essex Property Trust Inc. (NYSE:ESS) stock decreased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Essex Property Trust’s growth potential. Our calculations showed that Essex Property Trust Inc. (NYSE:ESS) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
