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 NextPoint Residential Trust, Inc. (NYSE:NXRT) and explained its insights for the company. Founded in 2014, NextPoint Residential Trust, Inc. (NYSE:NXRT) is a Dallas, Texas-based real estate investment trust company with a $3.6 billion market capitalization. NextPoint Residential Trust, Inc. (NYSE:NXRT)delivered a -12.35% return since the beginning of the year, while its 12-month returns are up by 41.74%. The stock closed at $73.48 per share on May 31, 2022.
Here is what Rhizome Partners has to say about NextPoint Residential Trust, Inc. (NYSE:NXRT) in its Q1 2022 investor letter:
“During the quarter, we sold our 1% position in NexPoint Residential, a Sunbelt multi-family REIT. The rent growth is phenomenal, but we believe that higher gas, grocery, and rent prices may decelerate future rent growth. More important, NexPoint trades at a nosebleed valuation of 3.7% 2022 capitalization rate after appreciating 170%. Separately, we sold out of our Preferred apartments position after Blackstone bid $25 per share for the company, 140% above our cost basis. Our Sunbelt exposure was small and the proceeds from these two positions are roughly 2% of our partners’ capital. By comparison, Clipper trades at an estimated 5% 2022 capitalization rate and Clipper has just started to increase rent from an unusually low level due to Covid, whereas the Sunbelt assets have been raising rents at double digits for over a year. History teaches us time after time that valuations do matter.”
Photo by Breno Assis on Unsplash
Our calculations show that NextPoint Residential Trust, Inc. (NYSE:NXRT) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. NextPoint Residential Trust, Inc. (NYSE:NXRT) was in 15 hedge fund portfolios at the end of the first quarter of 2022, compared to 14 funds in the previous quarter. NextPoint Residential Trust, Inc. (NYSE:NXRT) delivered a -13.52% return in the past 3 months. 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.
