At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Apartment Investment and Management Co. (NYSE:AIV) makes for a good investment right now.
Hedge fund interest in Apartment Investment and Management Co. (NYSE:AIV) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Gildan Activewear Inc (NYSE:GIL), Store Capital Corporation (NYSE:STOR), and Santander Consumer USA Holdings Inc (NYSE:SC) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the latest hedge fund action surrounding Apartment Investment and Management Co. (NYSE:AIV).
How have hedgies been trading Apartment Investment and Management Co. (NYSE:AIV)?
Heading into the second quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in AIV a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Apartment Investment and Management Co. (NYSE:AIV), with a stake worth $350.9 million reported as of the end of March. Trailing Renaissance Technologies was Zimmer Partners, which amassed a stake valued at $121 million. Balyasny Asset Management, Winton Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Apartment Investment and Management Co. (NYSE:AIV) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers that decided to sell off their full holdings in the third quarter. Interestingly, Ken Heebner's Capital Growth Management said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, totaling an estimated $16.7 million in stock, and Ray Dalio's Bridgewater Associates was right behind this move, as the fund dumped about $1.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Apartment Investment and Management Co. (NYSE:AIV) but similarly valued. These stocks are Gildan Activewear Inc (NYSE:GIL), Store Capital Corporation (NYSE:STOR), Santander Consumer USA Holdings Inc (NYSE:SC), and HD Supply Holdings Inc (NASDAQ:HDS). This group of stocks' market valuations resemble AIV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GIL,27,562233,2 STOR,22,1022248,-2 SC,22,748622,1 HDS,30,939166,-1 Average,25.25,818067,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $628 million in AIV's case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Apartment Investment and Management Co. (NYSE:AIV) is even less popular than STOR. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on AIV, though not to the same extent, as the stock returned -0.6% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.