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What Makes Extra Space Storage (EXR) a Good Long-Term Investment?

Diamond Hill Capital, an investment management company, released its “Long-Short Fund” fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. The portfolio achieved positive returns in Q4, but it trailed the Russell 1000 Index and the blended benchmark (60% Russell 1000 Index/40% Bloomberg US Treasury Bills 1-3 Month Index). The short positions didn't perform as well as the index, but they still contributed positively to the overall performance. The long positions in financials, on the other hand, performed better than the index. However, long positions in technology and the fund’s below-benchmark exposure didn't perform well and were the cause of underperformance in Q4. In addition, you may look at the fund’s top 5 holdings to learn about its best picks in 2023.

Diamond Hill Long-Short Fund featured stocks like Extra Space Storage Inc. (NYSE:EXR) in the fourth quarter 2023 investor letter. Headquartered in Salt Lake City, Utah, Extra Space Storage Inc. (NYSE:EXR) is a self-administered and self-managed REIT. On April 3, 2024, Extra Space Storage Inc. (NYSE:EXR) stock closed at $145.06 per share. One-month return of Extra Space Storage Inc. (NYSE:EXR) was -0.96%, and its shares lost 10.89% of their value over the last 52 weeks. Extra Space Storage Inc. (NYSE:EXR) has a market capitalization of $31.738 billion.

Diamond Hill Long-Short Fund stated the following regarding Extra Space Storage Inc. (NYSE:EXR) in its fourth quarter 2023 investor letter:

"We initiated several new positions in Q4, including one long position: Extra Space Storage Inc. (NYSE:EXR). Following a dip in share price after Q2 earnings and rising interest rates, we had an opportunity to make an initial investment in Extra Space Storage (EXR). Despite facing near-term challenges like normalizing street rents and occupancy rates after two years of robust demand, as well as the recent merger with Life Storage, we believe EXR is well-positioned for long-term intrinsic value growth. It boasts an impressive franchise and perhaps the industry’s best operating platform. The Life Storage acquisition broadens its real estate portfolio and presents more opportunities for growth. While the company faces some near-term headwinds, the recent sell-off created an opportunity for us to acquire shares in this high-quality franchise at a very reasonable price."

An aerial view of a self-storage facility, its parking lot full with cars and RV's.

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Extra Space Storage Inc. (NYSE:EXR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Extra Space Storage Inc. (NYSE:EXR) was held by 26 hedge fund portfolios, up from 21 in the previous quarter, according to our database.

We discussed Extra Space Storage Inc. (NYSE:EXR) in another article and shared Carillon Chartwell Mid Cap Value Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 2023 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.