Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Acadia Realty Trust (NYSE:AKR).
Is AKR a good stock to buy now? Hedge funds were in a bearish mood. The number of bullish hedge fund bets were trimmed by 2 recently. Acadia Realty Trust (NYSE:AKR) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that AKR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most stock holders, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, We look at the top tier of this group, approximately 850 funds. These money managers preside over most of all hedge funds’ total capital, and by keeping track of their first-class equity investments, Insider Monkey has unearthed a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the key hedge fund action surrounding Acadia Realty Trust (NYSE:AKR).
Do Hedge Funds Think AKR Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AKR over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Acadia Realty Trust (NYSE:AKR). Citadel Investment Group has a $7.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is D E Shaw, led by D. E. Shaw, holding a $6.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Forward Management allocated the biggest weight to Acadia Realty Trust (NYSE:AKR), around 0.06% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to AKR.
Because Acadia Realty Trust (NYSE:AKR) has experienced falling interest from hedge fund managers, we can see that there were a few hedge funds that decided to sell off their entire stakes heading into Q4. Interestingly, Jonathan Litt’s Land & Buildings Investment Management sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $1 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund cut about $0.7 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Acadia Realty Trust (NYSE:AKR) but similarly valued. These stocks are Rattler Midstream LP (NASDAQ:RTLR), Liberty Oilfield Services Inc. (NYSE:LBRT), Chase Corporation (NYSE:CCF), Huron Consulting Group (NASDAQ:HURN), Fanhua Inc. (NASDAQ:FANH), OrthoPediatrics Corp. (NASDAQ:KIDS), and Systemax Inc. (NYSE:SYX). This group of stocks’ market valuations are similar to AKR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $26 million in AKR’s case. Systemax Inc. (NYSE:SYX) is the most popular stock in this table. On the other hand Fanhua Inc. (NASDAQ:FANH) is the least popular one with only 5 bullish hedge fund positions. Acadia Realty Trust (NYSE:AKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AKR is 74.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on AKR as the stock returned 39.3% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.