Is Mid-America Apartment Communities Inc (MAA) Going to Burn These Hedge Funds?

Earlier this year, many hedge funds were holding a larger percentage of their assets in cash than at any other time in recent memory, as fears that the market was due for a correction abounded. This led to many small-cap stocks being hit hard, as hedge funds, which tend to be some of their staunchest backers, liquidated their holdings. Now however, hedge funds appear to be growing more confident and putting their money back into equities, which has led to small-cap stocks taking off, with the Russell 2000 ETF (IWM) having outperformed the S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. In this article, we’ll see how this large shift in hedge fund activity impacted Mid-America Apartment Communities Inc (NYSE:MAA) .

Mid-America Apartment Communities Inc (NYSE:MAA) investors should pay attention to a decrease in enthusiasm from smart money lately. MAA was in 15 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with MAA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Scripps Networks Interactive, Inc. (NYSE:SNI), Darden Restaurants, Inc. (NYSE:DRI), and Garmin Ltd. (NASDAQ:GRMN) to gather more data points.

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Hedge fund activity in Mid America Apartment Communities Inc (NYSE:MAA)

Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 12% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in MAA heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the largest position in Mid-America Apartment Communities Inc (NYSE:MAA), worth close to $58.1 million. On Renaissance Technologies’s heels is Fisher Asset Management, led by Ken Fisher, holding a $54.4 million position. Remaining hedge funds and institutional investors with similar optimism include Ric Dillon’s Diamond Hill Capital, Israel Englander’s Millennium Management and Ray Carroll’s Breton Hill Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Mid-America Apartment Communities Inc (NYSE:MAA) has experienced falling interest from the smart money, we can see that there exists a select few funds that slashed their entire stakes heading into Q4. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the biggest investment of the 700 funds tracked by Insider Monkey, valued at close to $9.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $3 million worth.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mid-America Apartment Communities Inc (NYSE:MAA) but similarly valued. These stocks are Scripps Networks Interactive, Inc. (NYSE:SNI), Darden Restaurants, Inc. (NYSE:DRI), Garmin Ltd. (NASDAQ:GRMN), and Crescent Point Energy Corp (NYSE:CPG). This group of stocks’ market values match MAA’s market value.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $429 million. That figure was $206 million in MAA’s case. Darden Restaurants, Inc. (NYSE:DRI) is the most popular stock in this table. On the other hand Crescent Point Energy Corp (NYSE:CPG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Mid America Apartment Communities Inc (NYSE:MAA) is even less popular than CPG. 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.

Disclosure: None