Do Hedge Funds Love Mid America Apartment Communities Inc (MAA)?

In this article you are going to find out whether hedge funds think Mid America Apartment Communities Inc (NYSE:MAA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Mid America Apartment Communities Inc (NYSE:MAA) shareholders have witnessed a decrease in hedge fund interest in recent months. Mid America Apartment Communities Inc (NYSE:MAA) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. Our calculations also showed that MAA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer PartnersZimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the fresh hedge fund action surrounding Mid America Apartment Communities Inc (NYSE:MAA).

Do Hedge Funds Think MAA Is A Good Stock To Buy Now?

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MAA over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, King Street Capital was the largest shareholder of Mid America Apartment Communities Inc (NYSE:MAA), with a stake worth $65 million reported as of the end of March. Trailing King Street Capital was Long Pond Capital, which amassed a stake valued at $47.7 million. Diamond Hill Capital, Citadel Investment Group, and Zimmer Partners 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 King Street Capital allocated the biggest weight to Mid America Apartment Communities Inc (NYSE:MAA), around 4.86% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, designating 1.63 percent of its 13F equity portfolio to MAA.

Judging by the fact that Mid America Apartment Communities Inc (NYSE:MAA) has witnessed bearish sentiment from hedge fund managers, logic holds that there was a specific group of hedge funds that decided to sell off their positions entirely heading into Q2. Interestingly, Ken Fisher’s Fisher Asset Management cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling close to $38.3 million in stock. Clint Carlson’s fund, Carlson Capital, also cut its stock, about $19.7 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Mid America Apartment Communities Inc (NYSE:MAA) but similarly valued. We will take a look at ASE Technology Holding Co., Ltd. (NYSE:ASX), Penn National Gaming, Inc (NASDAQ:PENN), Nomura Holdings, Inc. (NYSE:NMR), MongoDB, Inc. (NASDAQ:MDB), Principal Financial Group Inc (NASDAQ:PFG), Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX), and Steris Plc (NYSE:STE). All of these stocks’ market caps match MAA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ASX 8 232071 -1
PENN 42 907475 1
NMR 10 19579 4
MDB 46 1540962 10
PFG 31 208237 5
FMX 15 845908 1
STE 30 1473753 -6
Average 26 746855 2

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 $747 million. That figure was $252 million in MAA’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Mid America Apartment Communities Inc (NYSE:MAA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MAA is 51.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on MAA as the stock returned 26% since the end of the first quarter (through 7/9) and outperformed the market by an even larger margin.

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