Baron Funds, an asset management company, released its “Baron Real Estate Income Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Income Fund (the “Fund”) declined 18.43% (Institutional Shares) in the second quarter of 2022, modestly underperforming its primary benchmark, the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Baron Real Estate Income Fund mentioned NexPoint Residential Trust, Inc. (NYSE:NXRT) and explained its insights for the company. Founded in 2014, NexPoint Residential Trust, Inc. (NYSE:NXRT) is a Dallas, Texas-based real estate investment trust company with a $2.6 billion market capitalization. NexPoint Residential Trust, Inc. (NYSE:NXRT) delivered a -38.08% return since the beginning of the year, while its 12-month returns are down by -16.46%. The stock closed at $51.91 per share on September 16, 2022.
Here is what Baron Real Estate Income Fund has to say about NexPoint Residential Trust, Inc. (NYSE:NXRT) in its Q2 2022 investor letter:
“Despite strong quarterly results and an encouraging update from management, the shares of NexPoint Residential Trust, Inc., a sunbelt focused apartment REIT, declined in the most recent quarter alongside most other REITs. At its recent price of only $62, we believe the shares are valued at a significant discount to its private market value and remain optimistic about the company’s prospects.
NexPoint owns and operates approximately 15,000 apartment units across 10 geographic markets primarily geared toward workforce housing with average rents of $1,300 per month. The company has substantial insider ownership and has been one of the most successful apartment operators in terms of equity value creation among its peers.
We believe NexPoint will achieve above average organic growth and are optimistic about the prospects for the company due to: i) its favorable market exposure in the sunbelt (attractive job growth, household formation, net migration, and increasing cost of ownership); ii) a shortage of affordable housing broadly, which is more acute in the sunbelt; iii) relative affordability both to other apartment or single-family rental options and the cost of home ownership; and iv) its ability to deploy capital into attractive value-added opportunities such as kitchen upgrades and washer/dryer installations at high returns on capital (around 20%) to augment organic growth…” (Click here to see the full text)
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Our calculations show that NexPoint Residential Trust, Inc. (NYSE:NXRT) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. NexPoint Residential Trust, Inc. (NYSE:NXRT) was in 14 hedge fund portfolios at the end of the second quarter of 2022, compared to 15 funds in the previous quarter. NexPoint Residential Trust, Inc. (NYSE:NXRT) delivered a -12.24% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on NexPoint Residential Trust, Inc. (NYSE:NXRT) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
