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Silver Bay Realty Trust Corp (SBY): Citadel Raises Stake in This Real Estate Investment Trust to 5%

Ken Griffin‘s Citadel Investment Group has disclosed in a new filing with the Securities and Exchange Commission that is has inched up its exposure to Silver Bay Realty Trust Corp (NYSE:SBY). Citadel revealed ownership of 1.88 million shares of the company, the position being increased from 1.71 million shares that the fund disclosed in its latest 13F filing. Following the increase, Citadel’s passive stake amasses 5.0% of Silver Bay Realty Trust.

Ken Griffin

Citadel is generally a passive investor, which, nevertheless, does not prevent it from beating the market in terms of returns. The fund follows a complex strategy that involves quantitative and technology-based methods and even though it lost over 50% during the crisis, it managed to recover and returned around 19% last year. A couple of weeks ago, Citadel also increased its position in Newfield Exploration Co. (NYSE:NFX), of which it owns 7.28 million shares, equal to 5.3% of the common stock. Prior to that, Citadel reported raising its stakes in Rosetta Resources Inc. (NASDAQ:ROSE) and JAKKS Pacific, Inc. (NASDAQ:JAKK) to 6.4% and 5.1% respectively. All three companies have gained ground since Citadel’s bullish moves.

The fund has been a shareholder of Silver Bay Realty Trust Corp (NYSE:SBY) since December 2012, when the company went public. Initially, Citadel held 1.03 million shares, but as the stock gained appreciated during the first quarter of 2013, the investor cut its position down to around 80,000 shares. Overall, Silver Bay lost around 10% since its IPO, while Mr. Griffin mostly kept raising his fund’s exposure to the stock, but the holding has never represented more than 1% of its total equity portfolio value.

Silver Bay Realty Trust Corp (NYSE:SBY) is a residential Real Estate Investment Trust that is engaged in acquisition, renovation and leasing of single-family houses in Arizona, California, Florida and several other states. The company has been posting improving financial results, third quarter revenue amounting to around $20 million, versus $19 million in the second quarter, but its net loss surged to $1.17 from $0.13 in the previous quarter being impacted by some one-time charges.

Emanuel J. Friedman‘s EJF Capital and Richard Driehaus‘ Driehaus Capital are two other funds that are bullish on Silver Bay Realty Trust Corp (NYSE:SBY). EJF Capital raised its stake by 140% during the third quarter to 2.34 million shares, and Driehaus Capital added the company to its equity portfolio during the same period and reported ownership of 406,600 shares in its latest 13F filing.

Mr. Griffin’s bet on Silver Bay might be explained by the overall attention that Real Estate Investment Trusts have gained over the last months. The S&P 500 Real Estate Composite Index is up by over 23% YTD, versus the S&P 500 gain of 11%. In this way, Silver Bay Realty Trust Corp (NYSE:SBY) might still be an underappreciated stock in the industry, which is also confirmed by investors who have a consensus “Buy” rating and an average target price of around $18.00 per share. Moreover, recently, Zacks has upgraded the stock to ‘Overweight’ from Neutral with a target price to $17.90.

Disclosure: none

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