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Were Hedge Funds Right About Betting On Apartment Investment and Management Co. (AIV)?

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Apartment Investment and Management Co. (NYSE:AIV) makes for a good investment right now.

Is Apartment Investment and Management Co. (NYSE:AIV) undervalued? The best stock pickers are betting on the stock. The number of bullish hedge fund bets rose by 3 in recent months. Our calculations also showed that AIV isn’t among the 30 most popular stocks among hedge funds (see the video below). AIV was in 24 hedge funds’ portfolios at the end of June. There were 21 hedge funds in our database with AIV positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AIV_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, 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. We’re going to take a look at the fresh hedge fund action surrounding Apartment Investment and Management Co. (NYSE:AIV).

How are hedge funds trading Apartment Investment and Management Co. (NYSE:AIV)?

At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AIV over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Dmitry Balyasny

More specifically, Renaissance Technologies was the largest shareholder of Apartment Investment and Management Co. (NYSE:AIV), with a stake worth $325.6 million reported as of the end of March. Trailing Renaissance Technologies was Zimmer Partners, which amassed a stake valued at $110.2 million. Balyasny Asset Management, Winton Capital Management, and Long Pond Capital were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Long Pond Capital, managed by John Khoury, created the largest position in Apartment Investment and Management Co. (NYSE:AIV). Long Pond Capital had $27.4 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $7.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel Johnson’s Gillson Capital, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.

Let’s go over hedge fund activity in other stocks similar to Apartment Investment and Management Co. (NYSE:AIV). We will take a look at Liberty Property Trust (NYSE:LPT), Etsy Inc (NASDAQ:ETSY), Guardant Health, Inc. (NASDAQ:GH), and American Homes 4 Rent (NYSE:AMH). All of these stocks’ market caps are similar to AIV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LPT 19 337910 0
ETSY 41 1228455 2
GH 19 225721 5
AMH 25 454005 6
Average 26 561523 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $701 million in AIV’s case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Liberty Property Trust (NYSE:LPT) is the least popular one with only 19 bullish hedge fund positions. Apartment Investment and Management Co. (NYSE:AIV) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on AIV, though not to the same extent, as the stock returned 4.9% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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