Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. What do these smart investors think about Invitation Homes Inc. (NYSE:INVH)?
Invitation Homes Inc. (NYSE:INVH) has experienced a decrease in enthusiasm from smart money recently. Our calculations also showed that INVH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the eyes of most shareholders, hedge funds are viewed as worthless, old investment tools of years past. While there are greater than 8000 funds trading at present, Our researchers hone in on the leaders of this group, approximately 750 funds. It is estimated that this group of investors orchestrate the majority of all hedge funds’ total asset base, and by tracking their best stock picks, Insider Monkey has come up with various investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Stuart Zimmer of Zimmer Partners
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s take a peek at the recent hedge fund action surrounding Invitation Homes Inc. (NYSE:INVH).
What have hedge funds been doing with Invitation Homes Inc. (NYSE:INVH)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards INVH over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Invitation Homes Inc. (NYSE:INVH) was held by Zimmer Partners, which reported holding $399.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $169.6 million position. Other investors bullish on the company included Senator Investment Group, D E Shaw, and Millennium Management. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 5.97% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, designating 5 percent of its 13F equity portfolio to INVH.
Due to the fact that Invitation Homes Inc. (NYSE:INVH) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of fund managers that decided to sell off their positions entirely last quarter. Intriguingly, Jeffrey Furber’s AEW Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising close to $94 million in stock, and Greg Poole’s Echo Street Capital Management was right behind this move, as the fund said goodbye to about $10.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Invitation Homes Inc. (NYSE:INVH) but similarly valued. We will take a look at Citizens Financial Group Inc (NYSE:CFG), WPP plc (NYSE:WPP), Regions Financial Corporation (NYSE:RF), and Amcor plc (NYSE:AMCR). This group of stocks’ market values are closest to INVH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CFG | 38 | 1571462 | -1 |
| WPP | 3 | 41384 | 0 |
| RF | 23 | 502597 | -9 |
| AMCR | 16 | 131192 | 4 |
| Average | 20 | 561659 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $1097 million in INVH’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand WPP plc (NYSE:WPP) is the least popular one with only 3 bullish hedge fund positions. Invitation Homes Inc. (NYSE:INVH) 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 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on INVH as the stock returned 48.3% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
