RGA Investment Advisors LLC, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. The fund underperformed markets during the quarter, and one adverse event in a portfolio company inflicted more pain than markets at large. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
RGA Investment Advisors, in its Q3 2021 investor letter, mentioned Kennedy-Wilson Holdings, Inc. (NYSE: KW) and discussed its stance on the firm. Kennedy-Wilson Holdings, Inc. is a Beverly Hills, California-based real estate investment company with a $3.3 billion market capitalization. KW delivered a 32.59% return since the beginning of the year, while its 12-month returns are up by 56.05%. The stock closed at $23.72 per share on November 14, 2021.
Here is what RGA Investment Advisors has to say about Kennedy-Wilson Holdings, Inc. in its Q3 2021 investor letter:
“From the Mountains, to the Profits
Kennedy Wilson (“KW”) is a high quality, founder led, real estate investment firm that benefits from the continued population expansion of the Mountain States of the United States (Colorado, Utah, Nevada, Idaho, etc.). KW trades at a discount to NAV, despite a clear path to double-digit annual NOI growth, because NOI growth has stagnated for the last three years. The strategic transition of the portfolio away from expensive hotel, retail, and California multifamily properties largely towards attractive Mountain State multifamily properties has obstructed core NOI growth during this time. Going forward, KW is well positioned to return to consistent NOI growth.
The company was started in 1988 when William McMorrow acquired an auction company with ambitions to purchase real estate during economic hardships. The auction company’s brand was essential to establish relationships with banks looking to sell distressed properties. Finding attractively priced investment opportunities has always been a core element of KW’s DNA. In the wake of the Great Recession, KW IPOed as a real estate investment firm. Shortly after the 2009 IPO, the company began investing in Europe and by 2014 grew a minority investment into a 25% stake in Kennedy Wilson Europe, a public UK and Irish real estate asset management firm. With Brexit suppressing valuations in 2017, KW acquired the remaining ~75% of these European assets…” (Click here to see the full text)
STUDIO GRAND OUEST/Shutterstock.com
Based on our calculations, Kennedy-Wilson Holdings, Inc. (NYSE: KW) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. KW was in 18 hedge fund portfolios at the end of the first half of 2021, compared to 16 funds in the previous quarter. Kennedy-Wilson Holdings, Inc. (NYSE: KW) delivered an 11.10% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
