East 72, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio gross return of 6.2% was recorded by the fund for the 2nd quarter of 2021 and a 33.6% gross return over the fiscal year. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
East 72, in its Q2 2021 investor letter, mentioned The Macerich Company (NYSE: MAC), and shared their insights on the company. The Macerich Company is a Santa Monica, California-based real estate investment trust company that invests in shopping centers, and it currently has a $3.5 billion market capitalization. Since the beginning of the year, MAC delivered a 60.64% return, extending its 12-month gains to 105.76%. As of July 06, 2021, the stock closed at $17.58 per share.
Here is what East 72 has to say about The Macerich Company in its Q2 2021 investor letter:
“We acquired three stocks on price weakness which all performed exceptionally after our purchase (which includes), Macerich, with an equity capitalisation of only US$3.8billion, one of the largest shopping centre owners in the USA, and is seeing significant improvements in patronage and space rentals; the shares are up around 44% from our $12.70/share acquisition price.”
Our calculations show that The Macerich Company (NYSE: MAC) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, The Macerich Company was in 19 hedge fund portfolios, compared to 16 funds in the fourth quarter of 2020. MAC delivered a 38.21% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.