At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Apartment Investment and Management Co. (NYSE:AIV).
Apartment Investment and Management Co. (NYSE:AIV) investors should be aware of a decrease in hedge fund interest of late. Our calculations also showed that AIV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the recent hedge fund action encompassing Apartment Investment and Management Co. (NYSE:AIV).
How have hedgies been trading Apartment Investment and Management Co. (NYSE:AIV)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AIV over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Apartment Investment and Management Co. (NYSE:AIV), with a stake worth $141 million reported as of the end of September. Trailing Renaissance Technologies was Long Pond Capital, which amassed a stake valued at $123.7 million. V3 Capital, Waterfront Capital Partners, and D E Shaw 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 V3 Capital allocated the biggest weight to Apartment Investment and Management Co. (NYSE:AIV), around 7.23% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, designating 6.34 percent of its 13F equity portfolio to AIV.
Seeing as Apartment Investment and Management Co. (NYSE:AIV) has witnessed falling interest from hedge fund managers, we can see that there were a few funds that elected to cut their positions entirely in the first quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the largest investment of the 750 funds monitored by Insider Monkey, worth about $27.7 million in stock, and Greg Poole’s Echo Street Capital Management was right behind this move, as the fund cut about $18.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Apartment Investment and Management Co. (NYSE:AIV) but similarly valued. These stocks are Jones Lang LaSalle Inc (NYSE:JLL), American Airlines Group Inc (NASDAQ:AAL), CubeSmart (NYSE:CUBE), and Pearson PLC (NYSE:PSO). All of these stocks’ market caps resemble AIV’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $395 million in AIV’s case. American Airlines Group Inc (NASDAQ:AAL) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 8 bullish hedge fund positions. Apartment Investment and Management Co. (NYSE:AIV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately AIV wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AIV investors were disappointed as the stock returned 12.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.