Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is Medical Properties Trust, Inc. (NYSE:MPW) a sound investment today? The smart money is reducing their bets on the stock. The number of long hedge fund positions retreated by 3 lately. Our calculations also showed that MPW isn't among the 30 most popular stocks among hedge funds.
At the moment there are plenty of metrics market participants can use to evaluate publicly traded companies. Two of the less utilized metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a significant amount (see the details here).
Let's take a peek at the new hedge fund action surrounding Medical Properties Trust, Inc. (NYSE:MPW).
Hedge fund activity in Medical Properties Trust, Inc. (NYSE:MPW)
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MPW over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Medical Properties Trust, Inc. (NYSE:MPW) was held by Cardinal Capital, which reported holding $125.6 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $37.9 million position. Other investors bullish on the company included Winton Capital Management, Citadel Investment Group, and PEAK6 Capital Management.
Due to the fact that Medical Properties Trust, Inc. (NYSE:MPW) has experienced bearish sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of fund managers who were dropping their entire stakes last quarter. It's worth mentioning that Gilchrist Berg's Water Street Capital dumped the largest position of the "upper crust" of funds followed by Insider Monkey, comprising about $11.1 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund sold off about $7.6 million worth. These moves are important to note, as aggregate hedge fund interest fell 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 Medical Properties Trust, Inc. (NYSE:MPW) but similarly valued. These stocks are Tallgrass Energy, LP (NYSE:TGE), Jones Lang LaSalle Inc (NYSE:JLL), Berry Global Group Inc (NYSE:BERY), and Carlisle Companies, Inc. (NYSE:CSL). This group of stocks' market caps match MPW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TGE,11,36489,3 JLL,23,940107,4 BERY,40,2602301,-3 CSL,22,251859,1 Average,24,957689,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $958 million. That figure was $221 million in MPW's case. Berry Global Group Inc (NYSE:BERY) is the most popular stock in this table. On the other hand Tallgrass Energy, LP (NYSE:TGE) is the least popular one with only 11 bullish hedge fund positions. Medical Properties Trust, Inc. (NYSE:MPW) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MPW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MPW investors were disappointed as the stock returned 0.1% 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.