A time series of Hα spectra of the rapidly rotating star HK Aqr has been analyzed. Evidence is found for the presence of cool clouds which are in co-rotation with the star. The cloud velocities, as derived from the clouds’ absorption features, can be used to put constraints on the clouds’ co-latitudes and their distances from the star using a so-called visibility diagram. For HK Aqr most clouds are at distances of 2–3 stellar radii and do not extend beyond the co-rotation radius. By using a simple radiative transfer model, we demonstrate that for most stars the presence of clouds affects the whole Hα profile and does not result in discrete absorptions. Only clouds near rapidly rotating stars, with an inclination close to 90°, will cause discrete absorption features. The cool cloud plasma can form when a temperature inversion is created at the apex of a stellar-sized coronal loop because of reduced coronal heating at large distances from the star. It is likely that the cloud condensations are related to inverse polarity filaments because, near rapidly rotating stars, the axial current in normal polarity filaments decreases with height and has to change sign at the co-rotation radius.