Hedge Funds Are Selling Invitation Homes Inc. (INVH)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Invitation Homes Inc. (NYSE:INVH)?

Invitation Homes Inc. (NYSE:INVH) has experienced a decrease in activity from the world’s largest hedge funds in recent months. INVH was in 27 hedge funds’ portfolios at the end of the first quarter of 2020. There were 33 hedge funds in our database with INVH positions at the end of the previous quarter. Our calculations also showed that INVH 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 today’s marketplace there are numerous formulas stock traders employ to appraise their stock investments. A couple of the most under-the-radar formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform their index-focused peers by a significant margin (see the details here).

Ken Heebner of Capital Growth Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. With all of this in mind let’s take a glance at the recent hedge fund action regarding Invitation Homes Inc. (NYSE:INVH).

How are hedge funds trading Invitation Homes Inc. (NYSE:INVH)?

Heading into the second quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INVH over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Invitation Homes Inc. (NYSE:INVH) was held by Zimmer Partners, which reported holding $169.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $160.2 million position. Other investors bullish on the company included D E Shaw, Waterfront Capital Partners, and Woodson Capital Management. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 10.63% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, setting aside 5.03 percent of its 13F equity portfolio to INVH.

Seeing as Invitation Homes Inc. (NYSE:INVH) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few money managers that slashed their entire stakes last quarter. Interestingly, Josh Donfeld and David Rogers’s Castle Hook Partners dumped the biggest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $15 million in stock. Simon Sadler’s fund, Segantii Capital, also dropped its stock, about $9 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Invitation Homes Inc. (NYSE:INVH) but similarly valued. These stocks are Ryanair Holdings plc (NASDAQ:RYAAY), Arch Capital Group Ltd. (NASDAQ:ACGL), LINE Corporation (NYSE:LN), and Credicorp Ltd. (NYSE:BAP). This group of stocks’ market caps resemble INVH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RYAAY 22 550561 0
ACGL 33 733577 10
LN 7 59060 -6
BAP 22 193610 0
Average 21 384202 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $563 million in INVH’s case. Arch Capital Group Ltd. (NASDAQ:ACGL) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 7 bullish hedge fund positions. Invitation Homes Inc. (NYSE:INVH) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on INVH as the stock returned 23.8% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.