Rhizome Partners, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. For the first quarter of 2021, Rhizome Partners generated a net loss of 9.9% versus a 4.6% loss for the Standard & Poor’s 500 Index and a 5.3% loss for the National Association of Real Estate Investment Trusts (NAREIT) Index. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Rhizome Partners mentioned Clipper Realty Inc. (NYSE:CLPR) and explained its insights for the company. Founded in 2015, Clipper Realty Inc. (NYSE:CLPR) is a US-based REIT company with a $358.5 million market capitalization. Clipper Realty Inc. (NYSE:CLPR) delivered a -17.34% return since the beginning of the year, while its 12-month returns are down by -22.27%. The stock closed at $8.46 per share on May 31, 2022.
Here is what Rhizome Partners has to say about Clipper Realty Inc. (NYSE:CLPR) in its Q1 2022 investor letter:
“Clipper bought another project on Dean Street, right next to 1010 Pacific Street. To our surprise, the company announced that the 1010 Pacific Street building may be completed by year-end 2022. This new multi-family building will be delivered into a red-hot rental market. Unlike some smaller, mom and pop developers, Clipper has executed and moved quickly on this project. New York City apartment rents continue to reach all-time highs. As leases expire in 2022, we believe rent increases will be in the double digits. We believe that Clipper will eventually re-rate because it will trade close to a 6% cap rate upon stabilization in 2023, too cheap for a multi-family REIT. In the coming months, when other buyside analysts receive rent increase notices from their landlords, the Clipper thesis will really hit home. In theory, cap rates can rise higher than 6% in the future. In practice, developers cannot profitably build new supply if cap rates are 6% due to New York City’s unique land constraints and difficulties in permitting and construction. Without new supply, rent growth should result in a stabilized cap rate higher than 6% over time.”
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Our calculations show that Clipper Realty Inc. (NYSE:CLPR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Clipper Realty Inc. (NYSE:CLPR) was in 4 hedge fund portfolios at the end of the first quarter of 2022. Clipper Realty Inc. (NYSE:CLPR) delivered a -11.83% return in the past 3 months. In November last year, we also shared Rhizome’s Q3 2021 views on Clipper Realty Inc. (NYSE:CLPR) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
