In this article we are going to use hedge fund sentiment as a tool and determine whether The Macerich Company (NYSE:MAC) is a good investment 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.
The Macerich Company (NYSE:MAC) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. The Macerich Company (NYSE:MAC) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 38. There were 19 hedge funds in our database with MAC holdings at the end of March. Our calculations also showed that MAC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to view the recent hedge fund action surrounding The Macerich Company (NYSE:MAC).
Do Hedge Funds Think MAC Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -47% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MAC over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the number one position in The Macerich Company (NYSE:MAC). Two Sigma Advisors has a $59.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $23.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to The Macerich Company (NYSE:MAC), around 0.4% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to MAC.
Because The Macerich Company (NYSE:MAC) has experienced falling interest from hedge fund managers, it’s safe to say that there is a sect of money managers that slashed their positions entirely in the second quarter. It’s worth mentioning that Emanuel J. Friedman’s EJF Capital cut the biggest investment of the 750 funds followed by Insider Monkey, valued at close to $21.2 million in stock. Lee Ainslie’s fund, Maverick Capital, also sold off its stock, about $19.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 9 funds in the second quarter.
Let’s check out hedge fund activity in other stocks similar to The Macerich Company (NYSE:MAC). These stocks are Sunoco LP (NYSE:SUN), Kinsale Capital Group, Inc. (NASDAQ:KNSL), Rogers Corporation (NYSE:ROG), CI Financial Corp (NYSE:CIXX), Franklin Electric Co., Inc. (NASDAQ:FELE), Blackbaud, Inc. (NASDAQ:BLKB), and Spire Inc. (NYSE:SR). This group of stocks’ market valuations are closest to MAC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SUN | 3 | 7823 | 1 |
| KNSL | 17 | 51377 | 0 |
| ROG | 16 | 159071 | -1 |
| CIXX | 9 | 176429 | -3 |
| FELE | 18 | 134022 | -2 |
| BLKB | 15 | 128755 | -5 |
| SR | 9 | 9652 | 0 |
| Average | 12.4 | 95304 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $115 million in MAC’s case. Franklin Electric Co., Inc. (NASDAQ:FELE) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 3 bullish hedge fund positions. The Macerich Company (NYSE:MAC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MAC is 27.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately MAC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MAC investors were disappointed as the stock returned -1.3% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Macerich Co (NASDAQ:MAC)
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Disclosure: None. This article was originally published at Insider Monkey.
