Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Mid America Apartment Communities Inc (NYSE:MAA).
Is Mid America Apartment Communities Inc (NYSE:MAA) a healthy stock for your portfolio? The smart money is getting more bullish. The number of long hedge fund positions rose by 2 recently. Mid America Apartment Communities Inc (NYSE:MAA) was in 18 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with Mid America Apartment Communities Inc (NYSE:MAA) holdings at the end of the previous quarter. At the end of this article, we will also compare Mid America Apartment Communities Inc (NYSE:MAA) to other stocks, including Rite Aid Corporation (NYSE:RAD), Zayo Group Holdings Inc (NYSE:ZAYO), and Fluor Corporation (NEW) (NYSE:FLR) to get a better sense of its popularity.
Follow Mid America Apartment Communities Inc. (NYSE:MAA)
Follow Mid America Apartment Communities Inc. (NYSE:MAA)
To the average investor, there are a multitude of metrics stock traders employ to assess publicly traded companies. A couple of the most under-the-radar metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace their index-focused peers by a significant amount (see the details here).
With all of this in mind, we’re going to take a look at the latest action regarding Mid America Apartment Communities Inc (NYSE:MAA).
What have hedge funds been doing with Mid America Apartment Communities Inc (NYSE:MAA)?
Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 13% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the biggest position in Mid America Apartment Communities Inc (NYSE:MAA), worth close to $60.6 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $49.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Ken Fisher’s Fisher Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Poole’s Echo Street Capital Management.
Consequently, key hedge funds were breaking ground themselves. Decade Capital Management, managed by Millennium Management Subsidiary, created the largest position in Mid America Apartment Communities Inc (NYSE:MAA). Decade Capital Management had $1.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.6 million position during the quarter. The other funds with brand new Mid America Apartment Communities Inc (NYSE:MAA) positions are David Costen Haley’s HBK Investments, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Mid America Apartment Communities Inc (NYSE:MAA) but similarly valued. We will take a look at Rite Aid Corporation (NYSE:RAD), Zayo Group Holdings Inc (NYSE:ZAYO), Fluor Corporation (NEW) (NYSE:FLR), and Pepco Holdings, Inc. (NYSE:POM). This group of stocks’ market values is similar to Mid America Apartment Communities Inc (NYSE:MAA)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RAD | 46 | 1003793 | -9 |
| ZAYO | 22 | 344508 | 1 |
| FLR | 25 | 213843 | -4 |
| POM | 21 | 278632 | 5 |
As you can see, these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $460 million. That figure was $248 million in Mid America Apartment Communities Inc (NYSE:MAA)’s case. Rite Aid Corporation (NYSE:RAD) is the most popular stock in this table. On the other hand, Pepco Holdings, Inc. (NYSE:POM) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks, Mid America Apartment Communities Inc (NYSE:MAA) is even less popular than Pepco Holdings, Inc. (NYSE:POM). 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.
