Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Global Medical REIT Inc. (NYSE:GMRE).
Global Medical REIT Inc. (NYSE:GMRE) has experienced a decrease in activity from the world's largest hedge funds of late. Our calculations also showed that GMRE isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the new hedge fund action encompassing Global Medical REIT Inc. (NYSE:GMRE).
Hedge fund activity in Global Medical REIT Inc. (NYSE:GMRE)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GMRE over the last 17 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.
More specifically, Marshall Wace was the largest shareholder of Global Medical REIT Inc. (NYSE:GMRE), with a stake worth $4.4 million reported as of the end of September. Trailing Marshall Wace was Two Sigma Advisors, which amassed a stake valued at $3.1 million. Millennium Management, Renaissance Technologies, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Dorset Management allocated the biggest weight to Global Medical REIT Inc. (NYSE:GMRE), around 0.39% of its 13F portfolio. Marshall Wace is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to GMRE.
Because Global Medical REIT Inc. (NYSE:GMRE) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies who sold off their full holdings in the third quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the largest stake of the 750 funds watched by Insider Monkey, valued at an estimated $0.8 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund said goodbye to about $0.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to Global Medical REIT Inc. (NYSE:GMRE). These stocks are El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Hibbett Sports, Inc. (NASDAQ:HIBB), Unifi, Inc. (NYSE:UFI), and Hingham Institution for Savings (NASDAQ:HIFS). This group of stocks' market values are closest to GMRE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOCO,10,9183,-1 HIBB,14,80882,-1 UFI,15,88362,3 HIFS,5,7034,0 Average,11,46365,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $16 million in GMRE's case. Unifi, Inc. (NYSE:UFI) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 5 bullish hedge fund positions. Global Medical REIT Inc. (NYSE:GMRE) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on GMRE as the stock returned 22.1% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.