Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Armada Hoffler Properties Inc (NYSE:AHH).
Armada Hoffler Properties Inc (NYSE:AHH) is a small-cap real estate company, whose stock has gained 10% since the beginning of the year. Moreover, AHH shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Howver, 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 CIBER, Inc. (NYSE:CBR), OraSure Technologies, Inc. (NASDAQ:OSUR), and Innocoll AG (NASDAQ:INNL) to gather more data points.
Follow Armada Hoffler Properties Inc. (NYSE:AHH)
Follow Armada Hoffler Properties Inc. (NYSE:AHH)
According to most market participants, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading today, Our researchers hone in on the masters of this club, approximately 700 funds. It is estimated that this group of investors direct the majority of the smart money’s total capital, and by keeping an eye on their best stock picks, Insider Monkey has found numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s review the key action regarding Armada Hoffler Properties Inc (NYSE:AHH).
How have hedgies been trading Armada Hoffler Properties Inc (NYSE:AHH)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 9% over the quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the largest position in Armada Hoffler Properties Inc (NYSE:AHH). Renaissance Technologies has a $5.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is David Brown’s Hawk Ridge Management, with an $5 million position; 3.7% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include J. Alan Reid, Jr.’s Forward Management, Richard Driehaus’s Driehaus Capital, and D. E. Shaw’s D E Shaw.
As aggregate interest increased, key hedge funds were breaking ground themselves. McKinley Capital Management, managed by Robert B. Gillam, established the most valuable position in Armada Hoffler Properties Inc (NYSE:AHH). McKinley Capital Management had $1.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated an $0.1 million position during the quarter. The only other fund with a brand new AHH position is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Armada Hoffler Properties Inc (NYSE:AHH). These stocks are CIBER, Inc. (NYSE:CBR), OraSure Technologies, Inc. (NASDAQ:OSUR), Innocoll AG (NASDAQ:INNL), and Electro Rent Corporation (NASDAQ:ELRC). This group of stocks’ market values are similar to AHH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBR | 10 | 23908 | -1 |
| OSUR | 25 | 38572 | 4 |
| INNL | 5 | 27556 | 0 |
| ELRC | 8 | 21647 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $24 million in AHH’s case. OraSure Technologies, Inc. (NASDAQ:OSUR) is the most popular stock in this table. On the other hand Innocoll AG (NASDAQ:INNL) is the least popular one with only 5 bullish hedge fund positions. Armada Hoffler Properties Inc (NYSE:AHH) has the level of interest close to the average, compared to the stocks in the table. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OSUR might be a better candidate to consider a long position.
