The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Armada Hoffler Properties Inc (NYSE:AHH) from the perspective of those elite funds.
Is Armada Hoffler Properties Inc (NYSE:AHH) an attractive investment now? Money managers are becoming more confident. The number of bullish hedge fund positions improved by 1 in recent months. Our calculations also showed that AHH isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the key hedge fund action regarding Armada Hoffler Properties Inc (NYSE:AHH).
What does the smart money think about Armada Hoffler Properties Inc (NYSE:AHH)?
At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2018. On the other hand, there were a total of 6 hedge funds with a bullish position in AHH a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Armada Hoffler Properties Inc (NYSE:AHH), which was worth $47.7 million at the end of the fourth quarter. On the second spot was Royce & Associates which amassed $2.9 million worth of shares. Moreover, Citadel Investment Group, AQR Capital Management, and Two Sigma Advisors were also bullish on Armada Hoffler Properties Inc (NYSE:AHH), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the most outsized position in Armada Hoffler Properties Inc (NYSE:AHH). Springbok Capital had $0.2 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Armada Hoffler Properties Inc (NYSE:AHH). These stocks are ACCO Brands Corporation (NYSE:ACCO), Bryn Mawr Bank Corp. (NASDAQ:BMTC), Tidewater Inc. (NYSE:TDW), and Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB). This group of stocks' market values resemble AHH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACCO,21,36332,0 BMTC,8,37812,-1 TDW,14,176770,3 YMAB,6,51844,-5 Average,12.25,75690,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $55 million in AHH's case. ACCO Brands Corporation (NYSE:ACCO) is the most popular stock in this table. On the other hand Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) is the least popular one with only 6 bullish hedge fund positions. Armada Hoffler Properties Inc (NYSE:AHH) is not the least popular stock in this group but hedge fund interest is still below average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AHH wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); AHH investors were disappointed as the stock returned 11.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.