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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded American Campus Communities, Inc. (NYSE:ACC) and determine whether the smart money was really smart about this stock.
American Campus Communities, Inc. (NYSE:ACC) investors should pay attention to an increase in hedge fund sentiment lately. American Campus Communities, Inc. (NYSE:ACC) was in 26 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ACC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we're going to go over the latest hedge fund action encompassing American Campus Communities, Inc. (NYSE:ACC).
How have hedgies been trading American Campus Communities, Inc. (NYSE:ACC)?
At second quarter's end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ACC over the last 20 quarters. So, let's examine 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, John Smith Clark's Southpoint Capital Advisors has the number one position in American Campus Communities, Inc. (NYSE:ACC), worth close to $73.4 million, comprising 1.8% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $70.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Ric Dillon's Diamond Hill Capital, John M. Angelo and Michael L. Gordon's Angelo Gordon & Co and Isaac Corre's Governors Lane. In terms of the portfolio weights assigned to each position Angelo Gordon & Co allocated the biggest weight to American Campus Communities, Inc. (NYSE:ACC), around 5.79% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, dishing out 5.52 percent of its 13F equity portfolio to ACC.
As industrywide interest jumped, key hedge funds have jumped into American Campus Communities, Inc. (NYSE:ACC) headfirst. Southpoint Capital Advisors, managed by John Smith Clark, created the most outsized position in American Campus Communities, Inc. (NYSE:ACC). Southpoint Capital Advisors had $73.4 million invested in the company at the end of the quarter. Isaac Corre's Governors Lane also initiated a $33.4 million position during the quarter. The other funds with new positions in the stock are Eduardo Abush's Waterfront Capital Partners, Marc Lisker, Glenn Fuhrman and John Phelan's MSDC Management, and Brandon Haley's Holocene Advisors.
Let's check out hedge fund activity in other stocks similar to American Campus Communities, Inc. (NYSE:ACC). These stocks are 51job, Inc. (NASDAQ:JOBS), RH (NYSE:RH), KT Corporation (NYSE:KT), SiteOne Landscape Supply, Inc. (NYSE:SITE), Helen of Troy Limited (NASDAQ:HELE), National Oilwell Varco, Inc. (NYSE:NOV), and Everbridge, Inc. (NASDAQ:EVBG). All of these stocks' market caps resemble ACC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JOBS,9,18146,0 RH,40,1040238,10 KT,12,166879,-3 SITE,18,63257,-1 HELE,13,152121,-3 NOV,30,621557,1 EVBG,43,1161901,12 Average,23.6,460586,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $365 million in ACC's case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand 51job, Inc. (NASDAQ:JOBS) is the least popular one with only 9 bullish hedge fund positions. American Campus Communities, Inc. (NYSE:ACC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACC is 65. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately ACC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ACC were disappointed as the stock returned -1.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.