East 72, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio gross return of 2.1% was recorded by the fund for the third quarter of 2021 and a +36.7% gross return over the fiscal year. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
East 72, in its Q3 2021 investor letter, mentioned The Macerich Company (NYSE: MAC) and discussed its stance on the firm. The Macerich Company is a Santa Monica, California-based real estate investment trust with a $3.7 billion market capitalization. MAC delivered a 65.51% return since the beginning of the year, while its 12-month returns are up by 139.62%. The stock closed at $17.66 per share on October 13, 2021.
Here is what East 72 has to say about The Macerich Company in its Q3 2021 investor letter:
“Macerich (all figures in US$) is a major US mall owner, with an interest in 51 regional centres, mainly in California, Arizona, DC, and the New York Tri-state area. As a consequence, its 4.7million sq.m of lettable space attracts well above average spend from concentrated urban population16. The REIT has a market capitalisation of ~$3.5billion (221m shares at $16.70) and $4.7billion of net on balance sheet debt with a further $6billion debt in unconsolidated JV’s where it holds an overall 54% share of assets carried at $9billion. Hence, attributable net debt is around $7.5billion…” (Click here to see the full text)
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Based on our calculations, The Macerich Company (NYSE: MAC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MAC was in 10 hedge fund portfolios at the end of the first half of 2021, compared to 19 funds in the previous quarter. The Macerich Company (NYSE: MAC) delivered a 0.28% 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.
