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Hedge Funds Keep Buying Mid America Apartment Communities Inc (MAA)

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. In this article we look at what those investors think of Mid America Apartment Communities Inc (NYSE:MAA).

Is Mid America Apartment Communities Inc (NYSE:MAA) a buy right now? The smart money is betting on the stock. The number of long hedge fund bets went up by 2 in recent months. Our calculations also showed that MAA 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). MAA was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. There were 24 hedge funds in our database with MAA holdings at the end of the previous quarter.

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

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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Charles Davidson - Wexford Capital

Charles Davidson of Wexford Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s analyze the key hedge fund action encompassing Mid America Apartment Communities Inc (NYSE:MAA).

How are hedge funds trading Mid America Apartment Communities Inc (NYSE:MAA)?

Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in MAA a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in Mid America Apartment Communities Inc (NYSE:MAA) was held by Fisher Asset Management, which reported holding $38.4 million worth of stock at the end of September. It was followed by Millennium Management with a $36.7 million position. Other investors bullish on the company included Renaissance Technologies, Diamond Hill Capital, and Zimmer Partners. In terms of the portfolio weights assigned to each position Wexford Capital allocated the biggest weight to Mid America Apartment Communities Inc (NYSE:MAA), around 1.35% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.22 percent of its 13F equity portfolio to MAA.

Now, key hedge funds have jumped into Mid America Apartment Communities Inc (NYSE:MAA) headfirst. Zimmer Partners, managed by Stuart J. Zimmer, assembled the biggest position in Mid America Apartment Communities Inc (NYSE:MAA). Zimmer Partners had $28.3 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also made a $7.2 million investment in the stock during the quarter. The other funds with new positions in the stock are John Khoury’s Long Pond Capital, Paul Tudor Jones’s Tudor Investment Corp, and Charles Davidson and Joseph Jacobs’s Wexford Capital.

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. These stocks are Xylem Inc (NYSE:XYL), Tyler Technologies, Inc. (NYSE:TYL), Sun Communities Inc (NYSE:SUI), and Pioneer Natural Resources Company (NYSE:PXD). All of these stocks’ market caps are closest to MAA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XYL 27 428104 6
TYL 30 405643 9
SUI 28 323201 -3
PXD 40 534807 -13
Average 31.25 422939 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $423 million. That figure was $245 million in MAA’s case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Mid America Apartment Communities Inc (NYSE:MAA) is even less popular than XYL. Hedge funds dodged a bullet by taking a bearish stance towards MAA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately MAA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MAA investors were disappointed as the stock returned 14% during the second quarter (through the end of May) 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 so far in 2020.

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