Hedge Funds Have Never Been This Bullish On Acadia Realty Trust (AKR)

Asma UL Husna

Sat, Oct 26, 2019, 7:54 PM

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 gone over 730 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 28th. In this article we look at what those investors think of Acadia Realty Trust (NYSE:AKR).

Acadia Realty Trust (NYSE:AKR) was in 13 hedge funds' portfolios at the end of the second quarter of 2019. AKR shareholders have witnessed an increase in enthusiasm from smart money of late. There were 10 hedge funds in our database with AKR holdings at the end of the previous quarter. Our calculations also showed that AKR isn't among the 30 most popular stocks among hedge funds (see the video below).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to analyze the key hedge fund action regarding Acadia Realty Trust (NYSE:AKR).

What have hedge funds been doing with Acadia Realty Trust (NYSE:AKR)?

At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AKR over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Martin Whitman Third Avenue Management Marty Whitman

The largest stake in Acadia Realty Trust (NYSE:AKR) was held by AEW Capital Management, which reported holding $37.6 million worth of stock at the end of March. It was followed by Third Avenue Management with a $31.4 million position. Other investors bullish on the company included Fisher Asset Management, Balyasny Asset Management, and Winton Capital Management.

As industrywide interest jumped, key hedge funds were leading the bulls' herd. Winton Capital Management, managed by David Harding, initiated the biggest position in Acadia Realty Trust (NYSE:AKR). Winton Capital Management had $7 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen's Point72 Asset Management and John Overdeck and David Siegel's Two Sigma Advisors.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Acadia Realty Trust (NYSE:AKR) but similarly valued. These stocks are Yext, Inc. (NYSE:YEXT), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Endava plc (NYSE:DAVA), and ExlService Holdings, Inc. (NASDAQ:EXLS). This group of stocks' market values are similar to AKR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YEXT,21,186091,-2 HAIN,17,545406,4 DAVA,8,52160,2 EXLS,11,44825,1 Average,14.25,207121,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $109 million in AKR's case. Yext, Inc. (NYSE:YEXT) is the most popular stock in this table. On the other hand Endava plc (NYSE:DAVA) is the least popular one with only 8 bullish hedge fund positions. Acadia Realty Trust (NYSE:AKR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on AKR, though not to the same extent, as the stock returned 5.4% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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