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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Invitation Homes Inc. (NYSE:INVH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is INVH stock a buy? Invitation Homes Inc. (NYSE:INVH) has experienced a decrease in activity from the world's largest hedge funds of late. Invitation Homes Inc. (NYSE:INVH) was in 27 hedge funds' portfolios at the end of December. The all time high for this statistic is 33. There were 28 hedge funds in our database with INVH positions at the end of the third quarter. Our calculations also showed that INVH isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind let's take a gander at the new hedge fund action surrounding Invitation Homes Inc. (NYSE:INVH).
Do Hedge Funds Think INVH Is A Good Stock To Buy Now?
At Q4's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards INVH over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Zimmer Partners held the most valuable stake in Invitation Homes Inc. (NYSE:INVH), which was worth $210.1 million at the end of the fourth quarter. On the second spot was Echo Street Capital Management which amassed $117.3 million worth of shares. Citadel Investment Group, Millennium Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 5.42% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, setting aside 4.38 percent of its 13F equity portfolio to INVH.
Because Invitation Homes Inc. (NYSE:INVH) has experienced bearish sentiment from hedge fund managers, we can see that there was a specific group of hedgies that slashed their positions entirely by the end of the fourth quarter. Interestingly, Jonathan Litt's Land & Buildings Investment Management said goodbye to the biggest stake of the "upper crust" of funds watched by Insider Monkey, worth about $21.7 million in stock, and Daniel Johnson's Gillson Capital was right behind this move, as the fund dropped about $6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the fourth quarter.
Let's go over hedge fund activity in other stocks similar to Invitation Homes Inc. (NYSE:INVH). We will take a look at FirstEnergy Corp. (NYSE:FE), Monolithic Power Systems, Inc. (NASDAQ:MPWR), The Liberty SiriusXM Group (NASDAQ:LSXMA), Carnival Corporation & plc (NYSE:CUK), Logitech International SA (NASDAQ:LOGI), Tractor Supply Company (NASDAQ:TSCO), and Sun Communities Inc (NYSE:SUI). This group of stocks' market values resemble INVH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FE,50,1305329,-9 MPWR,30,640635,-7 LSXMA,42,1691626,0 CUK,7,116507,-6 LOGI,21,432791,6 TSCO,39,1179291,-9 SUI,27,600763,-4 Average,30.9,852420,-4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $834 million in INVH's case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 7 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 51.8. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on INVH as the stock returned 13.9% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.