The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Invitation Homes Inc. (NYSE:INVH) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Invitation Homes Inc. (NYSE:INVH) has experienced an increase in hedge fund sentiment lately. Invitation Homes Inc. (NYSE:INVH) was in 33 hedge funds' portfolios at the end of June. The all time high for this statistics is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that INVH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's analyze the new hedge fund action encompassing Invitation Homes Inc. (NYSE:INVH).
How have hedgies been trading Invitation Homes Inc. (NYSE:INVH)?
At Q2's end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the first quarter of 2020. On the other hand, there were a total of 31 hedge funds with a bullish position in INVH a year ago. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stuart J. Zimmer's Zimmer Partners has the biggest position in Invitation Homes Inc. (NYSE:INVH), worth close to $199.4 million, accounting for 2.7% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $79.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Israel Englander's Millennium Management, James Woodson Davis's Woodson Capital Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 7.64% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, setting aside 5.54 percent of its 13F equity portfolio to INVH.
With a general bullishness amongst the heavyweights, some big names have jumped into Invitation Homes Inc. (NYSE:INVH) headfirst. Long Pond Capital, managed by John Khoury, assembled the most outsized position in Invitation Homes Inc. (NYSE:INVH). Long Pond Capital had $33.9 million invested in the company at the end of the quarter. Mark Coe's Intrinsic Edge Capital also made a $14.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel Johnson's Gillson Capital, Usman Waheed's Strycker View Capital, and Ravi Chopra's Azora Capital.
Let's check out hedge fund activity in other stocks similar to Invitation Homes Inc. (NYSE:INVH). We will take a look at Check Point Software Technologies Ltd. (NASDAQ:CHKP), Discover Financial Services (NYSE:DFS), Vulcan Materials Company (NYSE:VMC), Telefonica Brasil SA (NYSE:VIV), Quest Diagnostics Incorporated (NYSE:DGX), Cardinal Health, Inc. (NYSE:CAH), and Tractor Supply Company (NASDAQ:TSCO). This group of stocks' market values are similar to INVH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHKP,28,725079,-1 DFS,44,740724,4 VMC,51,879902,2 VIV,12,99788,4 DGX,46,804000,8 CAH,49,956785,5 TSCO,38,828499,1 Average,38.3,719254,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.3 hedge funds with bullish positions and the average amount invested in these stocks was $719 million. That figure was $694 million in INVH's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 12 bullish hedge fund positions. Invitation Homes Inc. (NYSE:INVH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INVH is 66.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately INVH wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); INVH investors were disappointed as the stock returned 4.5% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Get real-time email alerts: Follow Invitation Homes Inc. (NYSE:INVH)
Disclosure: None. This article was originally published at Insider Monkey.