Miller Value Partners, an investment management firm, published its “Miller Income Strategy” third quarter 2021 investor letter – a copy of which can be seen here. A quarterly return of -2.8% has been recorded by the fund for the third quarter of 2021, versus the 0.9% return of the ICE BofA US High Yield Index for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Miller Value Partners, in its Q3 2021 investor letter, mentioned Preferred Apartment Communities, Inc. (NYSE: APTS) and discussed its stance on the firm. Preferred Apartment Communities is an Atlanta, Georgia-based real estate investment trust company with a $659.4 million market capitalization. APTS delivered a 70.00% return since the beginning of the year, while its 12-month returns are up by 131.25%. The stock closed at $12.58 per share on November 4, 2021.
Here is what Miller Value Partners has to say about Preferred Apartment Communities, Inc. in its Q3 2021 investor letter:
“Preferred Apartment Communities (APTS) was the top contributor over the quarter, advancing 27.3%. The company reported Q2 Funds from Operations (FFO) of $0.33, topping consensus of $0.22 on higher rental revenue and interest income as demand for Sunbelt multifamily assets drove new lease rate growth of 11%. Rental and property revenues increased 5.5% Year-over-Year (Y/Y) on a 220 basis point increase in occupancy to 96.9% while rental rates rose 1.6%. Management increased 2021 guidance, including FFO of $0.90-$1.00 (from $0.73-$0.83), same-store net operating income (NOI) growth of 5%-7% (from 2%-3%), real estate loan investment originations of $50M-$100M, and acquisition volume of $300M-$400M. Management continued to take steps to simplify its business model through the sale of $645M in office portfolio assets and using proceeds to repurchase Series-A preferred stock.”
Leonardo da/Shutterstock.com
Based on our calculations, Preferred Apartment Communities, Inc. (NYSE: APTS) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. APTS was in 13 hedge fund portfolios at the end of the first half of 2021, compared to 7 funds in the previous quarter. Preferred Apartment Communities, Inc. (NYSE: APTS) delivered a 10.16% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
