Rhizome Partners, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 11.5% was recorded by the fund, outperforming the S&P 500 Index that delivered a +6.2% return and the FTSE NAREIT All Equity REIT Total Return Index that was up by 8.3% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Rhizome Partners, in its Q1 2021 investor letter, mentioned INDUS Realty Trust, Inc. (NASDAQ: INDT), and shared their insights on the company. INDUS Realty Trust, Inc. is a New York, New York-based real estate investment trust company that currently has a $493.1 million market capitalization. Since the beginning of the year, INDT delivered a 2.26% return, extending its 12-month gains to 67.30%. As of May 19, 2021, the stock closed at $63.91 per share.
Here is what Rhizome Partners has to say about INDUS Realty Trust, Inc. in its Q1 2021 investor letter:
“INDUS Realty (formerly known as Griffin) raised $105 million at $60 per share during the quarter. Investment banks who syndicated the capital raise include Morgan Stanley, Citigroup, Baird, BTIG, JMP Securities and J.P. Morgan. This is a wise allocation among the investment banks as it increases the odds of potential research coverage. This transaction should be considered the IPO of the company. INDUS now has access to capital and a pipeline to grow and potentially become a multi-billion dollar warehouse REIT. As value investors, we need to remember the original purpose of the capital market which is to provide low-cost capital. This is particularly important for a small REIT with a good track record and a long runway. INDUS currently has $100mm of development projects that they expect to yield 6.1-6.5% upon stabilization. Comparable public companies trade at a 4% cap rate. If INDUS can raise equity capital at a 4% cap rate valuation and develop assets at 6.1-6.6%, then INDUS will generate 53-65% of value on $100mm which equates to roughly $7-$8.5 per share on a $60 stock. Having bulge bracket underwriters signals that INDUS is a quality company. Based on our experience, there is an inverse relationship between reputation of the underwriters and the cost of capital. We are excited by the roster of underwriters because they can improve value creation of development projects and acquisitions. The access to cheap capital could potentially turn INDUS into a compounder.”
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Our calculations show that INDUS Realty Trust, Inc. (NASDAQ: INDT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. INDT delivered a -1.96% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative 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 website:
Disclosure: None. This article is originally published at Insider Monkey.
