Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Invitation Homes Inc. (NYSE:INVH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Invitation Homes Inc. (NYSE:INVH) investors should be aware of an increase in hedge fund interest recently. INVH was in 31 hedge funds’ portfolios at the end of June. There were 24 hedge funds in our database with INVH holdings at the end of the previous quarter. Our calculations also showed that INVH isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the key hedge fund action encompassing Invitation Homes Inc. (NYSE:INVH).
How have hedgies been trading Invitation Homes Inc. (NYSE:INVH)?
At Q2’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in INVH a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in Invitation Homes Inc. (NYSE:INVH), which was worth $186.3 million at the end of the second quarter. On the second spot was AEW Capital Management which amassed $94 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and Citadel Investment Group were also bullish on Invitation Homes Inc. (NYSE:INVH), allocating a large percentage of their portfolios to this stock.
Now, key money managers were breaking ground themselves. Capital Growth Management, managed by Ken Heebner, initiated the largest position in Invitation Homes Inc. (NYSE:INVH). Capital Growth Management had $19 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $10.5 million position during the quarter. The other funds with brand new INVH positions are Steve Cohen’s Point72 Asset Management, Mario Gabelli’s GAMCO Investors, and David Costen Haley’s HBK Investments.
Let’s now review hedge fund activity in other stocks similar to Invitation Homes Inc. (NYSE:INVH). We will take a look at Live Nation Entertainment, Inc. (NYSE:LYV), Icahn Enterprises LP (NASDAQ:IEP), Huntington Bancshares Incorporated (NASDAQ:HBAN), and WellCare Health Plans, Inc. (NYSE:WCG). This group of stocks’ market valuations are similar to INVH’s market valuation.
|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 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $4100 million. That figure was $685 million in INVH’s case. WellCare Health Plans, Inc. (NYSE:WCG) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 5 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 20 most popular stocks (view the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on INVH as the stock returned 11.3% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.