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 American Homes 4 Rent (NYSE:AMH)?
Is American Homes 4 Rent (NYSE:AMH) a buy, sell, or hold? Hedge funds are in a pessimistic mood. The number of bullish hedge fund bets decreased by 2 lately. Our calculations also showed that AMH 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). AMH was in 21 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with AMH positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation today, We choose to focus on the aristocrats of this group, around 850 funds. These money managers oversee the lion’s share of all hedge funds’ total capital, and by tailing their inimitable equity investments, Insider Monkey has come up with various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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 we’re going to go over the fresh hedge fund action encompassing American Homes 4 Rent (NYSE:AMH).
How are hedge funds trading American Homes 4 Rent (NYSE:AMH)?
At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in AMH a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Greg Poole’s Echo Street Capital Management has the most valuable position in American Homes 4 Rent (NYSE:AMH), worth close to $39 million, accounting for 0.8% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $35.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions contain Charles Fitzgerald’s V3 Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Jonathan Litt’s Land & Buildings Investment Management. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to American Homes 4 Rent (NYSE:AMH), around 6.81% of its 13F portfolio. V3 Capital is also relatively very bullish on the stock, setting aside 5.21 percent of its 13F equity portfolio to AMH.
Because American Homes 4 Rent (NYSE:AMH) has faced a decline in interest from hedge fund managers, it’s easy to see that there was a specific group of funds that slashed their full holdings by the end of the first quarter. It’s worth mentioning that Noam Gottesman’s GLG Partners dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, valued at close to $29.2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to American Homes 4 Rent (NYSE:AMH). We will take a look at SEI Investments Company (NASDAQ:SEIC), The Toro Company (NYSE:TTC), Chemed Corporation (NYSE:CHE), and Vornado Realty Trust (NYSE:VNO). This group of stocks’ market caps resemble AMH’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 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $178 million in AMH’s case. SEI Investments Company (NASDAQ:SEIC) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks American Homes 4 Rent (NYSE:AMH) is even less popular than TTC. Hedge funds dodged a bullet by taking a bearish stance towards AMH. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market by 14.8 percentage points. Unfortunately AMH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); AMH investors were disappointed as the stock returned 18.3% during the second quarter (through June 17th) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.