Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Armada Hoffler Properties Inc (NYSE:AHH).
Is AHH a good stock to buy now? Armada Hoffler Properties Inc (NYSE:AHH) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that AHH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare AHH to other stocks including Vaxart, Inc. (NASDAQ:VXRT), OneSmart International Education Group Limited (NYSE:ONE), and Provention Bio, Inc. (NASDAQ:PRVB) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Algert of Algert Global
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we're going to review the new hedge fund action encompassing Armada Hoffler Properties Inc (NYSE:AHH).
Do Hedge Funds Think AHH Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AHH over the last 21 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Armada Hoffler Properties Inc (NYSE:AHH), with a stake worth $24.6 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $6.2 million. Intrinsic Edge Capital, Two Sigma Advisors, and Citadel Investment Group 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 Intrinsic Edge Capital allocated the biggest weight to Armada Hoffler Properties Inc (NYSE:AHH), around 0.24% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.07 percent of its 13F equity portfolio to AHH.
Because Armada Hoffler Properties Inc (NYSE:AHH) has experienced a decline in interest from the smart money, we can see that there lies a certain "tier" of fund managers that elected to cut their full holdings heading into Q4. It's worth mentioning that Israel Englander's Millennium Management sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising about $3.5 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also cut its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Armada Hoffler Properties Inc (NYSE:AHH) but similarly valued. These stocks are Vaxart, Inc. (NASDAQ:VXRT), OneSmart International Education Group Limited (NYSE:ONE), Provention Bio, Inc. (NASDAQ:PRVB), Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY), XPEL Inc. (NASDAQ:XPEL), Protagonist Therapeutics, Inc. (NASDAQ:PTGX), and Cohu, Inc. (NASDAQ:COHU). This group of stocks' market valuations are closest to AHH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VXRT,12,99934,5 ONE,20,169705,14 PRVB,10,83998,-4 PLAY,16,202166,4 XPEL,12,16036,8 PTGX,13,276569,2 COHU,8,47643,-4 Average,13,128007,3.6 [/table]
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $40 million in AHH's case. OneSmart International Education Group Limited (NYSE:ONE) is the most popular stock in this table. On the other hand Cohu, Inc. (NASDAQ:COHU) is the least popular one with only 8 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. Our overall hedge fund sentiment score for AHH is 45.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on AHH as the stock returned 16.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
