At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Is Macerich Company (NYSE:MAC) a first-rate investment now? Hedge funds are getting less bullish. The number of bullish hedge fund positions shrunk by 3 lately. Our calculations also showed that MAC isn't among the 30 most popular stocks among hedge funds. MAC was in 22 hedge funds' portfolios at the end of March. There were 25 hedge funds in our database with MAC positions at the end of the previous quarter.
In the financial world there are many gauges stock traders use to grade their stock investments. Two of the most under-the-radar gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce their index-focused peers by a superb amount (see the details here).
[caption id="attachment_30576" align="aligncenter" width="501"] Glenn Russell Dubin of Highbridge Capital[/caption]
We're going to take a glance at the latest hedge fund action regarding Macerich Company (NYSE:MAC).
How are hedge funds trading Macerich Company (NYSE:MAC)?
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in MAC a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Third Avenue Management held the most valuable stake in Macerich Company (NYSE:MAC), which was worth $57.2 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $55.9 million worth of shares. Moreover, Renaissance Technologies, Balyasny Asset Management, and Ulysses Management were also bullish on Macerich Company (NYSE:MAC), allocating a large percentage of their portfolios to this stock.
Because Macerich Company (NYSE:MAC) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few money managers that elected to cut their entire stakes last quarter. At the top of the heap, Jeremy Carton and Gilbert Li's Alta Fundamental Advisers dropped the largest investment of the 700 funds monitored by Insider Monkey, comprising close to $18.3 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $10.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Macerich Company (NYSE:MAC) but similarly valued. We will take a look at Parsley Energy Inc (NYSE:PE), Helmerich & Payne, Inc. (NYSE:HP), USG Corporation (NYSE:USG), and Cronos Group Inc. (NASDAQ:CRON). This group of stocks' market valuations resemble MAC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PE,34,849803,-2 HP,31,399271,4 USG,23,2358109,3 CRON,7,38000,1 Average,23.75,911296,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $911 million. That figure was $298 million in MAC's case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 7 bullish hedge fund positions. Macerich Company (NYSE:MAC) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately MAC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MAC investors were disappointed as the stock returned -13.3% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.