Crossroads Capital LLC, an investment management company released its third quarter 2024 investor letter. A copy of the same can be downloaded here. The Crossroads Capital Investment Partners, LP returned 4.2% net of all fees and expenses, bringing YTD net returns to 8.9%. The fund has compounded at 15.7% and 17.9% net, respectively, since inception, and over the last five years. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Crossroads Capital highlighted stocks like Arbor Realty Trust, Inc. (NYSE:ABR) in the third quarter 2024 investor letter. Headquartered in Uniondale, New York, Arbor Realty Trust, Inc. (NYSE:ABR) is a real estate investment trust that invests in a portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets. The one-month return of Arbor Realty Trust, Inc. (NYSE:ABR) was -2.67%, and its shares lost 8.20% of their value over the last 52 weeks. On December 17, 2024, Arbor Realty Trust, Inc. (NYSE:ABR) stock closed at $14.22 per share with a market capitalization of $2.682 billion.
Crossroads Capital stated the following regarding Arbor Realty Trust, Inc. (NYSE:ABR) in its Q3 2024 investor letter:
“Finally, we also closed out our short on Arbor Realty Trust, Inc. (NYSE:ABR) at a modest loss. Our thesis had played out perfectly, as the company’s assets deteriorated dramatically. Still, its equity proceeded to go up in value regardless. This is one of the strangest outcomes I can recall since I first opened our doors, but rather than buy more put options and press the position, we exited because I had underestimated the flexibility of its CRE CLO financing, a dynamic that appears to allow management the ability to “extend and pretend” (with regard to the value of its massively impaired multi-family real estate portfolio) pretty much indefinitely.
The whole episode reminded me of Buffett’s advice to Greenlight Capital’s David Einhorn on his long standing short of Allied Capital (a saga famously immortalized in his book Fooling Some of the People All the Time). Buffett reminded Einhorn that while Allied was just one position in his portfolio, for the company and its management, it was the whole ball game. That meant they would do things he wouldn’t consider doing to win. We’re not sure what will happen next with respect to ABR’s shenanigans, but to paraphrase Einhorn, in investing, one of the few things you can count on is that the truth will eventually come out. We couldn’t agree more, but with short positions, knowing not just what will cause it to work, but specifically when, is essential. With no clarity on timing, we moved on to areas where we had a more concrete edge.”
Rows of neatly arranged, multi-family homes, symbolizing the company’s large-scale investing opportunities.
Arbor Realty Trust, Inc. (NYSE:ABR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held Arbor Realty Trust, Inc. (NYSE:ABR) at the end of the third quarter which was 12 in the previous quarter. While we acknowledge the potential of Arbor Realty Trust, Inc. (NYSE:ABR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Arbor Realty Trust, Inc. (NYSE:ABR) and shared the list of best REIT dividend stocks to invest in. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.