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

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards American Campus Communities, Inc. (NYSE:ACC) to find out whether there were any major changes in hedge funds’ views.

American Campus Communities, Inc. (NYSE:ACC) investors should pay attention to a decrease in enthusiasm from smart money of late. American Campus Communities, Inc. (NYSE:ACC) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistic is 26. Our calculations also showed that ACC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s view the key hedge fund action encompassing American Campus Communities, Inc. (NYSE:ACC).

Do Hedge Funds Think ACC Is A Good Stock To Buy Now?

At second quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ACC over the last 24 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Land & Buildings Investment Management, managed by Jonathan Litt, holds the number one position in American Campus Communities, Inc. (NYSE:ACC). Land & Buildings Investment Management has a $61.4 million position in the stock, comprising 11.5% of its 13F portfolio. Coming in second is MSDC Management, led by Marc Lisker, Glenn Fuhrman and John Phelan, holding a $44.2 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass Israel Englander’s Millennium Management, Brandon Haley’s Holocene Advisors and Renaissance Technologies. In terms of the portfolio weights assigned to each position Land & Buildings Investment Management allocated the biggest weight to American Campus Communities, Inc. (NYSE:ACC), around 11.51% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, earmarking 5.2 percent of its 13F equity portfolio to ACC.

Seeing as American Campus Communities, Inc. (NYSE:ACC) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that decided to sell off their entire stakes last quarter. Interestingly, Isaac Corre’s Governors Lane said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, worth close to $50.9 million in stock. Stephen Mykijewycz’s fund, Masterton Capital Management, also dumped its stock, about $17.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to American Campus Communities, Inc. (NYSE:ACC). We will take a look at Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Affiliated Managers Group, Inc. (NYSE:AMG), DCP Midstream LP (NYSE:DCP), Foot Locker, Inc. (NYSE:FL), 360 DigiTech, Inc. (NASDAQ:QFIN), and Reynolds Consumer Products Inc. (NASDAQ:REYN). This group of stocks’ market caps are closest to ACC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $513 million. That figure was $223 million in ACC’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 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 overall hedge fund sentiment score for ACC is 42.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ACC as the stock returned 10.8% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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

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