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Lookback: Tao Value’s 2019 NexPoint Residential Trust (NXRT) Thesis

Alex Smith
·3 min read

If you are looking for the best ideas for your portfolio you may want to consider some of Tao Value’s top stock picks. Tao Value, an investment management firm, is bullish on NexPoint Residential Trust Inc. (NYSE:NXRT) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on NexPoint Residential Trust Inc. (NYSE:NXRT) stock. NexPoint Residential Trust Inc. (NYSE:NXRT) is the real estate investment trust company.

On October 30, 2019, Tao Value had released its Q3 2019 investor letter. The investment firm said that NexPoint Residential Trust Inc. (NYSE:NXRT) was one of the top 3 holdings in Q3 2019. The stock has posted a return of -10.4% in the trailing one year period, underperforming the S&P 500 Index which returned 15.8% in the same period. This suggests that the investment firm was wrong in its decision.

Tao Value fund posted a return of 1.26% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.87% in the same quarter. Let’s take a look at comments made by Tao Value about NexPoint Residential Trust Inc. (NYSE:NXRT) in the Q3 2019 investor letter.

"Nexpoint Residential Trust (ticker: NXRT) contributed +158 bps to the portfolio this quarter. NXRT has been firing on all cylinders on deal making. On 8/13/2019, it announced that it entered into agreements on two more deals, one $322 million property in Pembroke Pines, a suburb of Miami, and one $62 million property in Nashville. That brings year-to-day acquisitions up to 5 properties amounted $535 million, more than doubled its target of $250 million. It is a sign that management sees opportunities at right price. The stock price also performed very well, returning +36% YTD helped by a strong residential REIT market."

Residential REIT Stocks
Residential REIT Stocks

robert cicchetti / Shutterstock.com

In May 2020, we published an article revealing Tao Value's bullish investment thesis on NexPoint Residential Trust Inc. (NYSE:NXRT) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on NexPoint Residential Trust Inc. (NYSE:NXRT).

In Q1 2020, the number of bullish hedge fund positions on NexPoint Residential Trust Inc. (NYSE:NXRT) stock decreased by about 31% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in NXRT's growth potential. Our calculations showed that NexPoint Residential Trust Inc. (NYSE:NXRT) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla's stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. 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. 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:

Disclosure: None. This article is originally published at Insider Monkey.