In the 21st century investor’s toolkit, there are tons of indicators market participants can use to watch the equity markets. Some of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce the broader indices by a superb margin (see just how much).
Just as crucial, bullish insider trading activity is a second way to analyze the stock market universe. As the old adage goes: there are many incentives for an executive to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this method if “monkeys” know where to look (learn more here).
Keeping this in mind, let’s examine the newest info about AvalonBay Communities Inc (NYSE:AVB).
How are hedge funds trading AvalonBay Communities Inc (NYSE:AVB)?
At the end of the second quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of -10% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially.
Out of the hedge funds we follow, Jeffrey Furber’s AEW Capital Management had the biggest position in AvalonBay Communities Inc (NYSE:AVB), worth close to $192.8 million, accounting for 5% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $159.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers with similar optimism include D. E. Shaw’s D E Shaw, Clint Carlson’s Carlson Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.
Due to the fact AvalonBay Communities Inc (NYSE:AVB) has witnessed declining interest from the smart money’s best and brightest, it’s safe to say that there was a specific group of hedgies that slashed their positions entirely heading into Q2. It’s worth mentioning that Christian Leone’s Luxor Capital Group sold off the largest investment of the 450+ funds we monitor, comprising close to $82.7 million in stock, and John Khoury of Long Pond Capital was right behind this move, as the fund dropped about $19.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q2.
What do corporate executives and insiders think about AvalonBay Communities Inc (NYSE:AVB)?
Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, AvalonBay Communities Inc (NYSE:AVB) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to AvalonBay Communities Inc (NYSE:AVB). These stocks are Camden Property Trust (NYSE:CPT), UDR, Inc. (NYSE:UDR), Plum Creek Timber Co. Inc. (NYSE:PCL), Equity Residential (NYSE:EQR), and American Capital Agency Corp. (NASDAQ:AGNC). This group of stocks belong to the reit – residential industry and their market caps are similar to AVB’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Camden Property Trust (NYSE:CPT) | 11 | 0 | 0 |
| UDR, Inc. (NYSE:UDR) | 8 | 0 | 0 |
| Plum Creek Timber Co. Inc. (NYSE:PCL) | 15 | 0 | 0 |
| Equity Residential (NYSE:EQR) | 22 | 0 | 0 |
| American Capital Agency Corp. (NASDAQ:AGNC) | 24 | 0 | 0 |
Using the results demonstrated by the previously mentioned analyses, regular investors should always watch hedge fund and insider trading activity, and AvalonBay Communities Inc (NYSE:AVB) is an important part of this process.
