How do we determine whether Agree Realty Corporation (NYSE:ADC) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Agree Realty Corporation the right investment to pursue these days? The smart money is becoming less confident. The number of bullish hedge fund positions retreated by 4 in recent months. At the end of this article we will also compare ADC to other stocks including LGI Homes Inc (NASDAQ:LGIH), WMIH Corp (NASDAQ:WMIH), and Navios Maritime Acquisition Corp (NYSE:NNA) to get a better sense of its popularity.
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Now, let’s take a peek at the new action surrounding Agree Realty Corporation (NYSE:ADC).
What have hedge funds been doing with Agree Realty Corporation (NYSE:ADC)?
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Agree Realty Corporation (NYSE:ADC). Millennium Management has a $4.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $4.2 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw.
Because Agree Realty Corporation (NYSE:ADC) has experienced falling interest from hedge fund managers, it’s easy to see that there was a specific group of money managers that slashed their full holdings in the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising close to $2.8 million in stock. John Fichthorn’s fund, Dialectic Capital Management, also sold off its stock, about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Agree Realty Corporation (NYSE:ADC). These stocks are LGI Homes Inc (NASDAQ:LGIH), WMIH Corp (NASDAQ:WMIH), Navios Maritime Acquisition Corp (NYSE:NNA), and Kelly Services, Inc. (NASDAQ:KELYA). This group of stocks’ market caps resemble ADC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LGIH | 17 | 63702 | 11 |
| WMIH | 34 | 169118 | 30 |
| NNA | 11 | 10317 | -1 |
| KELYA | 10 | 26872 | 1 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $16 million in ADC’s case. WMIH Corp (NASDAQ:WMIH) is the most popular stock in this table. On the other hand Kelly Services, Inc. (NASDAQ:KELYA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Agree Realty Corporation (NYSE:ADC) is even less popular than KELYA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
