Is Macerich Company (NYSE:MAC) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Macerich Company (NYSE:MAC) shareholders have witnessed a decrease in enthusiasm from smart money recently. Our calculations also showed that MAC isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the recent hedge fund action regarding Macerich Company (NYSE:MAC).
What have hedge funds been doing with Macerich Company (NYSE:MAC)?
At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MAC over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Macerich Company (NYSE:MAC), which was worth $56.4 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $56.2 million worth of shares. Moreover, Third Avenue Management, Balyasny Asset Management, and Millennium Management were also bullish on Macerich Company (NYSE:MAC), allocating a large percentage of their portfolios to this stock.
Since Macerich Company (NYSE:MAC) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies who sold off their positions entirely last quarter. Intriguingly, Greg Poole’s Echo Street Capital Management dumped the biggest position of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $11.5 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund dropped about $2.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Macerich Company (NYSE:MAC). These stocks are Nuance Communications Inc. (NASDAQ:NUAN), Prosperity Bancshares, Inc. (NYSE:PB), Clarivate Analytics Plc (NYSE:CCC), and Kirby Corporation (NYSE:KEX). All of these stocks’ market caps resemble MAC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NUAN | 28 | 529243 | 0 |
| PB | 16 | 107741 | 7 |
| CCC | 21 | 437169 | -1 |
| KEX | 23 | 630317 | 4 |
| Average | 22 | 426118 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $426 million. That figure was $288 million in MAC’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 16 bullish hedge fund positions. Macerich Company (NYSE:MAC) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MAC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MAC investors were disappointed as the stock returned -3.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
