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Did Hedge Funds Drop The Ball On The Macerich Company (MAC) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded The Macerich Company (NYSE:MAC) and determine whether the smart money was really smart about this stock.

The Macerich Company (NYSE:MAC) has experienced a decrease in hedge fund sentiment of late. Our calculations also showed that MAC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to take a glance at the recent hedge fund action regarding The Macerich Company (NYSE:MAC).

What does smart money think about The Macerich Company (NYSE:MAC)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in MAC over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MAC A Good Stock To Buy?

Among these funds, Arrowstreet Capital held the most valuable stake in The Macerich Company (NYSE:MAC), which was worth $8.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $8.5 million worth of shares. Citadel Investment Group, Redwood Capital Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to The Macerich Company (NYSE:MAC), around 1.06% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, setting aside 0.57 percent of its 13F equity portfolio to MAC.

Judging by the fact that The Macerich Company (NYSE:MAC) has faced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedge funds who sold off their positions entirely heading into Q4. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners sold off the largest stake of all the hedgies tracked by Insider Monkey, worth about $4.4 million in stock, and James Thomas Berylson’s Berylson Capital Partners was right behind this move, as the fund cut about $3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Macerich Company (NYSE:MAC) but similarly valued. These stocks are Kite Realty Group Trust (NYSE:KRG), NMI Holdings Inc (NASDAQ:NMIH), Jack in the Box Inc. (NASDAQ:JACK), and Central European Media Enterprises Ltd. (NASDAQ:CETV). This group of stocks’ market caps are similar to MAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KRG 8 39474 -5
NMIH 23 90878 2
JACK 28 158985 2
CETV 11 36910 1
Average 17.5 81562 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $41 million in MAC’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Kite Realty Group Trust (NYSE:KRG) is the least popular one with only 8 bullish hedge fund positions. The Macerich Company (NYSE:MAC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on MAC as the stock returned 42.2% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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