We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards American Homes 4 Rent (NYSE:AMH), and what that likely means for the prospects of the company and its stock.
American Homes 4 Rent (NYSE:AMH) was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. AMH has seen an increase in activity from the world’s largest hedge funds recently. There were 14 hedge funds in our database with AMH positions at the end of the previous quarter. At the end of this article we will also compare AMH to other stocks including Bemis Company, Inc. (NYSE:BMS), AECOM Technology Corp (NYSE:ACM), and The Toro Company (NYSE:TTC) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading American Homes 4 Rent (NYSE:AMH)?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 36% from the previous quarter, pushing fund ownership to a high for the past year. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jason Karp’s Tourbillon Capital Partners has the most valuable position in American Homes 4 Rent (NYSE:AMH), worth close to $169.1 million, amounting to 3.5% of its total 13F portfolio. Sitting at the No. 2 spot is Jeffrey Furber of AEW Capital Management, with a $70.4 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other peers that are bullish include Jim Simons’ Renaissance Technologies, Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management.