Rhizome Partners, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. For the second quarter of 2022, Rhizome Partners generated a net loss of 9.1% versus a 16.1% loss for the Standard & Poor’s 500 Index and a 14.7% loss for the National Association of Real Estate Investment Trusts (NAREIT) Index. During the quarter, the fund’s hedging efforts generated about 5.5% of gains. The hedging gains were the primary contributor to Rhizome’s outperformance in the S&P 500 and the NAREIT. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Rhizome Partners mentioned The Howard Hughes Corporation (NYSE:HHC) and explained its insights for the company. Founded in 2010, The Howard Hughes Corporation (NYSE:HHC) is a The Woodlands, Texas-based real estate development and management company with a $3.2 billion market capitalization. The Howard Hughes Corporation (NYSE:HHC) delivered a -36.46% return since the beginning of the year, while its 12-month returns are down by -28.95%. The stock closed at $64.99 per share on August 30, 2022.
Here is what Rhizome Partners has to say about The Howard Hughes Corporation (NYSE:HHC) in its Q2 2022 investor letter:
“Howard Hughes Corporation experienced a 34% sell-off during the quarter. We believe the market is now worried about Howard Hughes’ land lot business since higher mortgage rates have slowed housing demand. The market also reacted negatively to Howard Hughes’ decision to acquire a stake in Jean George’s hospitality business, because it potentially muddles the investment thesis of a pure-play real estate company. First, we do not yet know the multiple of cash flow that Howard Hughes paid for the business. It will likely turn out to be very reasonable, once Howard Hughes discloses it in earnings. Second, the decision makes more sense if one views Howard Hughes’ core business as creating the most desired communities to live, work, and play in. Adding a Jean George restaurant concept in The Woodlands, Summerlin, or Hawaii has strategic value. As Howard Hughes has demonstrated with the Las Vegas baseball team, better amenities result in better pricing for land lots and faster velocity. The first quarter results were spectacular, which was expected. But the market is forward-looking, and shares have been punished. Although the perception, interest rate, and share prices have changed dramatically since Q1, the attractiveness of the communities and the real estate assets have not changed.”
Our calculations show that The Howard Hughes Corporation (NYSE:HHC) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. The Howard Hughes Corporation (NYSE:HHC) was in 24 hedge fund portfolios at the end of the second quarter of 2022, compared to 24 funds in the previous quarter. The Howard Hughes Corporation (NYSE:HHC) delivered a -23.77% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on The Howard Hughes Corporation (NYSE:HHC) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.