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Hedge Funds Are Dumping American Campus Communities, Inc. (ACC)

In this article we will take a look at whether hedge funds think American Campus Communities, Inc. (NYSE:ACC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is American Campus Communities, Inc. (NYSE:ACC) a healthy stock for your portfolio? Hedge funds are selling. The number of bullish hedge fund positions went down by 5 in recent months. Our calculations also showed that ACC 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). ACC was in 16 hedge funds’ portfolios at the end of the first quarter of 2020. There were 21 hedge funds in our database with ACC holdings at the end of the previous quarter.

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

To most investors, hedge funds are assumed to be slow, outdated financial tools of years past. While there are more than 8000 funds trading at present, Our experts look at the upper echelon of this club, about 850 funds. It is estimated that this group of investors have their hands on the lion’s share of the smart money’s total asset base, and by following their finest equity investments, Insider Monkey has revealed several investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 easiest remote jobs that pay well to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action regarding American Campus Communities, Inc. (NYSE:ACC).

Hedge fund activity in American Campus Communities, Inc. (NYSE:ACC)

At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ACC over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Diamond Hill Capital held the most valuable stake in American Campus Communities, Inc. (NYSE:ACC), which was worth $59 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $50.7 million worth of shares. D E Shaw, Renaissance Technologies, and Angelo Gordon & Co 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 Angelo Gordon & Co allocated the biggest weight to American Campus Communities, Inc. (NYSE:ACC), around 0.93% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, setting aside 0.4 percent of its 13F equity portfolio to ACC.

Because American Campus Communities, Inc. (NYSE:ACC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who sold off their entire stakes by the end of the first quarter. Interestingly, Greg Poole’s Echo Street Capital Management dropped the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $24.5 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also sold off its stock, about $0.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to American Campus Communities, Inc. (NYSE:ACC). We will take a look at Sealed Air Corporation (NYSE:SEE), KT Corporation (NYSE:KT), Armstrong World Industries, Inc. (NYSE:AWI), and First Solar, Inc. (NASDAQ:FSLR). This group of stocks’ market caps are closest to ACC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SEE 29 702381 -1
KT 15 159253 -2
AWI 20 323045 -4
FSLR 22 150839 -2
Average 21.5 333880 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $196 million in ACC’s case. Sealed Air Corporation (NYSE:SEE) is the most popular stock in this table. On the other hand KT Corporation (NYSE:KT) is the least popular one with only 15 bullish hedge fund positions. American Campus Communities, Inc. (NYSE:ACC) is not the least popular stock in this group but hedge fund interest is still below 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on ACC as the stock returned 29.5% during the second quarter and outperformed the market by an even larger margin.

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