Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Armada Hoffler Properties Inc (NYSE:AHH) investors should be aware of a decrease in hedge fund interest of late. AHH was in 10 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with AHH positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Medifast, Inc. (NYSE:MED), Arrowhead Research Corp (NASDAQ:ARWR), and Zumiez Inc. (NASDAQ:ZUMZ) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What does the smart money think about Armada Hoffler Properties Inc (NYSE:AHH)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 17% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in AHH at the beginning of this year. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in Armada Hoffler Properties Inc (NYSE:AHH). Renaissance Technologies has a $15.5 million position in the stock. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, which holds a $5.9 million position. Remaining peers with similar optimism include Robert B. Gillam’s McKinley Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that said goodbye to their entire stakes in the stock during the third quarter. Intriguingly, David Brown’s Hawk Ridge Management said goodbye to the largest stake of all the investors studied by Insider Monkey, comprising an estimated $0.9 million in stock. Richard Driehaus’ fund, Driehaus Capital, also dropped its stock, about $0.7 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to Armada Hoffler Properties Inc (NYSE:AHH). We will take a look at Medifast, Inc. (NYSE:MED), Arrowhead Research Corp (NASDAQ:ARWR), Zumiez Inc. (NASDAQ:ZUMZ), and Peoples Bancorp Inc. (NASDAQ:PEBO). All of these stocks’ market caps resemble AHH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MED | 15 | 88204 | -1 |
| ARWR | 10 | 71494 | 5 |
| ZUMZ | 6 | 15097 | 1 |
| PEBO | 4 | 6404 | 1 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $33 million in AHH’s case. Medifast, Inc. (NYSE:MED) is the most popular stock in this table. On the other hand Peoples Bancorp Inc. (NASDAQ:PEBO) is the least popular one with only 4 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MED might be a better candidate to consider taking a long position in.
Disclosure: None
