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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Mid America Apartment Communities Inc (NYSE:MAA) and determine whether the smart money was really smart about this stock.
Is Mid America Apartment Communities Inc (NYSE:MAA) a worthy investment now? The smart money was taking a bullish view. The number of bullish hedge fund positions increased by 4 recently. Mid America Apartment Communities Inc (NYSE:MAA) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MAA isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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.
Stuart Zimmer of Zimmer Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. With all of this in mind we’re going to take a peek at the fresh hedge fund action regarding Mid America Apartment Communities Inc (NYSE:MAA).
What does smart money think about Mid America Apartment Communities Inc (NYSE:MAA)?
At second quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the first quarter of 2020. By comparison, 13 hedge funds held shares or bullish call options in MAA a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Long Pond Capital was the largest shareholder of Mid America Apartment Communities Inc (NYSE:MAA), with a stake worth $101.7 million reported as of the end of September. Trailing Long Pond Capital was Zimmer Partners, which amassed a stake valued at $97.5 million. Millennium Management, Balyasny Asset Management, and Fisher 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 Long Pond Capital allocated the biggest weight to Mid America Apartment Communities Inc (NYSE:MAA), around 4.01% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, setting aside 1.32 percent of its 13F equity portfolio to MAA.
As industrywide interest jumped, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Mid America Apartment Communities Inc (NYSE:MAA). Balyasny Asset Management had $42.6 million invested in the company at the end of the quarter. Chen Tianqiao’s Shanda Asset Management also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new MAA investors: Greg Eisner’s Engineers Gate Manager, Benjamin A. Smith’s Laurion Capital Management, and Minhua Zhang’s Weld Capital Management.
Let’s now take a look at 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 Liberty Global plc (NASDAQ:LBTYA), International Flavors & Fragrances Inc (NYSE:IFF), Duke Realty Corporation (NYSE:DRE), Steris Plc (NYSE:STE), EXACT Sciences Corporation (NASDAQ:EXAS), Pinterest, Inc. (NYSE:PINS), and Avangrid, Inc. (NYSE:AGR). 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 |
|---|---|---|---|
| LBTYA | 29 | 1048280 | -1 |
| IFF | 31 | 234080 | 3 |
| DRE | 19 | 102859 | 3 |
| STE | 40 | 545240 | 5 |
| EXAS | 43 | 993223 | 9 |
| PINS | 53 | 1067483 | 15 |
| AGR | 18 | 132976 | 0 |
| Average | 33.3 | 589163 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $589 million. That figure was $504 million in MAA’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 18 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 56.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately MAA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MAA investors were disappointed as the stock returned 5.3% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Mid America Apartment Communities Inc. (NYSE:MAA)
Follow Mid America Apartment Communities Inc. (NYSE:MAA)
Disclosure: None. This article was originally published at Insider Monkey.
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