Baron Funds, an investment management company, released its “Baron Real Estate Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund declined 9.20% (Institutional Shares) in the second quarter compared to a 0.22% decline for the MSCI US REIT Index (the REIT Index) and a 4.03% decline for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index). Some of the Fund’s top performers from 2023 and the first quarter of 2024 experienced declines, partly due to concerns about slowing growth. This includes the shares of homebuilders, residential building product and services companies, casino and gaming operators, certain REITs, and other real estate-related companies. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Real Estate Fund highlighted stocks like AvalonBay Communities, Inc. (NYSE:AVB), in the second quarter 2024 investor letter. AvalonBay Communities, Inc. (NYSE:AVB) is a REIT that develops, redevelops, acquires, owns and operates multifamily communities. The one-month return of AvalonBay Communities, Inc. (NYSE:AVB) was 4.75%, and its shares gained 21.40% of their value over the last 52 weeks. On August 29, 2024, AvalonBay Communities, Inc. (NYSE:AVB) stock closed at $223.15 per share with a market capitalization of $31.736 billion.
Baron Real Estate Fund stated the following regarding AvalonBay Communities, Inc. (NYSE:AVB) in its Q2 2024 investor letter:
“In the second quarter, we increased the Fund’s REIT exposure to best-in-class multi-family owners/operators Equity Residential and AvalonBay Communities, Inc. (NYSE:AVB). Our meetings with each management team supported our view that both companies are led by astute executives that are highly focused on driving value creation for shareholders.
Equity Residential and AvalonBay each own approximately 80,000 apartment homes primarily in coastal markets. We believe these portfolios offer superior long-term growth prospects due to:
Favorable long-term demographic trends driven by strong population and job growth in their key geographic markets An undersupply of housing in the U.S. with outsized cost of ownership versus renting in their respective markets A high-earning, well-employed resident profile with attractive rent-to-income ratios allowing for future pricing power Low levered balance sheets which may present attractive opportunities for accretive external growth…” (Click here to read the full text)
An aerial view of a bustling metropolitan area with high-rise buildings and busy streets.
AvalonBay Communities, Inc. (NYSE:AVB) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held AvalonBay Communities, Inc. (NYSE:AVB) at the end of the second quarter which was 42 in the previous quarter. While we acknowledge the potential of AvalonBay Communities, Inc. (NYSE:AVB) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed AvalonBay Communities, Inc. (NYSE:AVB) and shared the list of best real estate and realty stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
