Baron Funds, an investment management firm, released its “Baron Real Estate Income Fund” third quarter 2023 investor letter, a copy of which can be downloaded here. In the first nine months of 2023, the Fund has increased 1.20%, outperforming the REIT Index, which declined 2.89%. As of September 30, 2023, the Fund has maintained its top 3% ranking among all real estate funds for its 5-year performance period. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.
In its Q3 2023 investor letter, Baron Real Estate Income Fund mentioned American Homes 4 Rent (NYSE:AMH) and explained its insights for the company. Founded in 2012, American Homes 4 Rent (NYSE:AMH) is a Las Vegas, Nevada-based real estate investment trust company with a $14.0 billion market capitalization. American Homes 4 Rent (NYSE:AMH) delivered a 12.71% return since the beginning of the year, while its 12-month returns are down by 7.60%. The stock closed at $33.97 per share on October 19, 2023.
Here is what Baron Real Estate Income Fund has to say about American Homes 4 Rent (NYSE:AMH) in its Q3 2023 investor letter:
“Following strong second quarter results, we modestly increased our investments in single-family rental REITs American Homes 4 Rent (NYSE:AMH). Demand conditions for rental homes are attractive due to the sharp decline in home affordability; the propensity to rent in order to avoid mortgage down payments, avoid higher monthly mortgage costs, and maintain flexibility; and the stronger demand for home rentals in suburbs rather than apartment rentals in cities. Rising construction costs are limiting the supply of single-family rental homes in the U.S. housing market. This limited inventory combined with strong demand is leading to robust rent growth.
American Homes 4 Rent have an opportunity to partially offset the impact of inflation given that their in-place annual leases are significantly below market rents. Valuations are compelling at mid-5% capitalization rates, and we believe the shares are currently valued at a discount to our assessment of net asset value. We remain mindful that expense headwinds and slower top-line growth could weigh on growth later in 2023 and 2024. We will continue to closely monitor business developments and will adjust our exposures accordingly.”
A real estate agent standing on the rooftop of a modern building with dynamic skylines in the background. Editorial photo for a financial news article. 8k. –ar 16:9
Our calculations show that American Homes 4 Rent (NYSE:AMH) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. American Homes 4 Rent (NYSE:AMH) was in 28 hedge fund portfolios at the end of the second quarter of 2023, compared to 20 funds in the previous quarter. American Homes 4 Rent (NYSE:AMH) delivered a -7.14% return in the past 3 months.
We also discussed American Homes 4 Rent (NYSE:AMH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
